As
filed with the Securities and Exchange Commission on
December
4,
2008
Registration
No. 333-
155472
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
FOR
REGISTRATION UNDER THE SECURITIES ACT OF 1933
SES
SOLAR INC.
(Exact
name of registrant as specified in its charter)
Delaware
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4931
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33-0860242
|
State
of
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(Primary
Standard Industrial
|
(I.R.S.
Employer
|
Incorporation
|
Classification
Code Number)
|
Identification
No.)
|
129
Route de Saint-Julien, 1228 Plan-les-Ouates, Geneva, Switzerland
+41.22.884.1484
(Address
and telephone number of registrant’s principal executive offices)
Delaware
Registry Ltd., 3511 Silverside Road, Suite 105, Wilmington, Delaware
19810
(
302)
477-9800
(Name,
address and telephone number of agent for service)
Copy
of
communications to:
Steven
M. Kaufman, Esq.
Hogan
& Hartson LLP
555
Thirteenth Street N.W.
Washington,
DC 20004
Tel:
(202) 637-5600
Approximate
date of commencement of proposed sale to the public:
As
soon as practicable after the effective date of this Registration Statement
and
from time to time thereafter.
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box.
ý
If
this
Form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
o
Large
accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
ý
Pursuant
to Rule 429(a) under the Securities Act of 1933, the prospectus included
in this
registration statement is a combined prospectus and relates to securities
of the
same class registered and remaining unsold under Registrant’s Registration
Statement on Form S-1 (File No. 333-140864) and amendments thereto. Pursuant
to
Rule 429(b), this registration statement also constitutes a post-effective
amendment to Registration Statement No. 333-140864, which post-effective
amendment shall hereafter become effective concurrently with the effectiveness
of this registration statement and in accordance with Section 8(c) of the
Securities Act of 1933. If securities previously registered under that
registration statement are offered and sold before the effective date of
this
registration statement, the amount of previously registered securities
so sold
will not be included in the prospectus hereunder.
____________________________________________________________
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
The
information in this prospectus is not complete and may change. The selling
stockholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell the securities, nor is it a solicitation of an
offer to
buy the securities in any jurisdiction where an offer or sale is not
permitted.
SUBJECT
TO COMPLETION, DATED
DECEMBER
4,
2008
9,889,546
Shares of Common Stock
SES
SOLAR INC.
_______________________________
This
prospectus relates to the sale of up to 9,889,546 shares
of
our
common stock, par value $0.001 per share,
by the
selling stockholders listed in the table under “Selling Stockholders.” The
shares offered pursuant to this prospectus relate to securities issued
to
non-affiliated investors in private placements completed in September 2006
and
November 2006.
This
prospectus also relates to certain shares
of
common stock, par value $0.001 per share,
that
were previously registered on behalf of the same selling stockholders on
Registration Statement No. 333-140864 and that remain unsold, and acts
as
post-effective amendment no. 1 to Registration Statement No.
333-140864.
_______________________________
The
selling stockholders may offer the shares covered by this prospectus at fixed
prices, at prevailing market prices, at varying prices or at negotiated prices,
in negotiated transactions, or in any trading markets for our common stock.
Additional information on the selling stockholders, and the times and manner
in
which they may offer and sell the shares registered hereby, is provided under
“Selling Stockholders” and “Plan of Distribution.”
______________________________
We
will
not receive any of the proceeds from the sale of the shares offered by the
selling stockholders, except upon exercise of the warrants. We will bear all
registration expenses incurred in connection with this offering, but all selling
and other expenses incurred by the selling stockholders will be borne by
them.
_______________________________
Our
common stock is quoted on the Over-the-Counter (OTC) Bulletin Board under
the
symbol “SESI.OB”. The high and low bid
price
for our
common stock on
December
2,
2008
was
$0.20
per
share, respectively, based upon bids that represent prices quoted by
broker-dealers on the OTC Bulletin Board. These quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commissions, and may not represent
actual transactions.
Investing
in our common stock involves a high degree of risk. See "Risk Factors" beginning
on page 5.
___________________________________
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
_______________________________
The
date of this prospectus is
December
4,
2008.
TABLE
OF CONTENTS
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1
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5
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14
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14
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15
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15
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17
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25
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34
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37
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39
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40
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43
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46
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48
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48
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49
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49
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__________________________________________________________
In
considering the acquisition of the common stock described in this prospectus,
you should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus is not an offer to sell, or a
solicitation of an offer to buy, shares of common stock in any jurisdiction
where offers and sales would be unlawful. The information contained in this
prospectus is complete and accurate only as of the date on the front cover
of
this prospectus, regardless of the time of delivery of this prospectus or of
any
sale of the shares of common stock.
SUMMARY
This
summary highlights information contained elsewhere in this prospectus. It is
not
complete and may not contain all of the information that you should consider
before investing in our common stock. You should read this entire prospectus,
including the information set forth under “Risk Factors,” our historical
financial statements and the related notes appearing elsewhere in this
prospectus, before deciding to invest in our common stock.
As
used in this prospectus, the terms “company,” “SES USA,” “our,” “we,” and “us”
refer to the registrant, SES Solar Inc. and its subsidiaries on a consolidated
basis, and the terms “SES Switzerland” and “SES Production” refer to our wholly
owned subsidiaries, unless the context requires otherwise.
Our
Business
We
are
engaged in the business of designing, engineering, producing and installing
photovoltaic (“PV”) solar panels or modules and solar tiles for generating
electricity through conversion of the sun’s energy. We have developed a new
assembly technology for solar panels that we believe will allow for higher
quality electrical contacts, better performance and reduced costs.
Our
goal
is to create a sustainable market for our solar modules and solar tiles by
utilizing our proprietary automation processes to produce solar modules and
solar tiles at a lower cost. We are in the final construction stages of our
manufacturing facility in Geneva, Switzerland that will include a new assembly
line based on our proprietary technology. We believe this new facility will
position us as one of the few manufacturers in Europe capable of producing
solar
PV modules that are larger than three square meters. Upon completion of this
manufacturing facility, we anticipate that we will be well-positioned to begin
full capacity production and sales of our solar products in 2009.
While
we
have been engaged in developing and testing our new solar panel technology
and
manufacturing processes, we have also been establishing the sales and
distribution portions of our business by custom manufacturing and selling solar
tiles and installing solar modules to electric companies, local governmental
agencies and private home owners. We expect that once our manufacturing facility
is fully operational, we will transition our business away from these custom
manufacturing projects and focus exclusively on large scale production and
sales
of our solar products.
To
date,
we have generated limited revenue from the sale and installation of custom
manufactured solar tiles and solar modules. We also generated revenue during
the
six months ended June 30, 2008 from the sale of electricity produced by the
solar PV modules on the roof of our new manufacturing facility, which we refer
to as the Solar Plant. We no longer expect to generate any additional revenue
from the sale of such electricity, as we sold the Solar Plant to a third party
during the second quarter of 2008.
Although
we recorded net income from discontinued operations during the nine months
ended
September 30, 2008, we generally have experienced losses from our early stage
operations, and we anticipate incurring additional losses over the next few
years as we complete the development, testing, and licensing of our solar
products and commence full scale production. To date, our research and
development costs and costs incurred in manufacturing prototype panels have
been
expensed. We do not believe that we can achieve profitability from operations
until development, implementation and commercialization of our solar products
manufactured using our new assembling processes are operational. As a result
of
our continuing need to fund operations and develop and market our new products,
we expect to continue to require additional capital in order to continue as
a
going concern. We currently do not have any arrangements in place to secure
such
funding.
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The
Offering
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Issuer
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SES
Solar Inc.
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Securities
Offered for Resale
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Up
to
9,889,546
shares of our common stock, which amount includes
1,500,000
shares issuable upon exercise of warrants.
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Common
Stock to be Outstanding After the
Offering
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73,081,168
shares
1
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Use
of Proceeds
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We
will not receive any proceeds from the sale of the shares offered
hereby.
To the extent exercised, we will receive proceeds upon exercise
of the
warrants. The warrants have an exercise price of $0.90 and expire
on
November 22, 2010.
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Trading
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Our
common stock is quoted on the OTC Bulletin Board under the symbol
“SESI.OB”.
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Risk
Factors
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You
should carefully consider the information set forth in the section
entitled “Risk Factors” beginning on page 5 of this prospectus in deciding
whether or not to invest in our common stock.
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1
Unless
the context indicates otherwise, all share and per-share information
in this
prospectus is based on 73,081,168 shares of our common stock outstanding
as of
December
2,
2008.
Shares of common stock to be outstanding after this offering, excluding
shares
issuable upon exercise of the warrants, assumes that all shares registered
hereby are sold by the selling stockholders.
Corporate
History and Information
We
were
incorporated in Nevada on February 3, 1999 to engage in the business of
operating an Internet-based auction website. Effective March 31, 2004, we
changed our state of domicile to Delaware. In the third quarter of 2005, we
abandoned our auction website business plan and focused on identifying
businesses with which to enter into a business combination.
We
changed our name to “Solar Energy Sources Inc.” and then to “SES Solar Inc.” in
mid-2006 in contemplation of entering into an arm’s-length negotiated share
exchange agreement with SES Switzerland, a private Swiss company, and the
stockholders thereof. The closing of the transactions contemplated by the share
exchange agreement and the acquisition of all of the issued and outstanding
shares of SES Switzerland occurred on September 27, 2006. The share exchange,
which did not require stockholder approval, was structured as a “reverse
merger.” As a result of the closing of the share exchange, we are now solely in
the business of designing, engineering, producing and installing
high-performance PV solar tiles and modules.
In
this
prospectus, we rely on and refer to information regarding the renewable energy
industry and the solar PV sector that has been prepared by governmental
agencies, such as the U.S. Department of Energy, or that has been compiled
from
independent market research reports, research analyst reports and other similar
information, such as the publicly available data prepared by Solarbuzz LLC.
Although we believe this information is reliable, we cannot guarantee the
accuracy and completeness of the information and have not independently verified
it. All of the industry and market data cited to and referenced in this
prospectus is publicly available and was neither commissioned by us nor provided
specifically for our benefit.
Our
principal executive offices are located at 129 Route de Saint-Julien, 1228
Plan-les-Ouates, Geneva, Switzerland, and our telephone number is
+41.22.884.14.84. Our website address is www.sessolar.com. The content of our
website is not part of this registration statement, of which this prospectus
is
a part, and should not be relied upon with respect thereto.
Summary
Financial Information
As
a
result of the September 27, 2006 share exchange agreement, SES Switzerland
became our wholly owned subsidiary. For accounting purposes, SES Switzerland
is
regarded as our predecessor and our corporate history dates back to the
formation of SES Switzerland. As such, the following financial information
represents selected audited financial information of SES Switzerland for the
fiscal years ended December 31, 2007 and 2006.
The
following summary historical financial data should be read in connection with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our historical combined financial statements and related notes
thereto included elsewhere in this prospectus.
The
summary historical financial data as of December 31, 2007 and 2006 and for
the years ended December 31, 2007 and 2006 have been derived from our
audited financial statements and notes thereto included elsewhere in this
prospectus, which have been audited by BDO Visura, independent registered public
accounting firm. The summary historical financial data as of September 30,
2008
and for the nine months ended September 30, 2008 and 2007 have been derived
from
our unaudited historical financial statements included elsewhere in this
prospectus. The historical results are not necessarily indicative of the results
to be expected in the future and results for interim periods are not necessarily
indicative of the results that may be expected for the entire year.
|
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Nine
Months
Ended
September
30,
2008
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Nine
Months
Ended
September
30,
2007
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Year
Ended
December
31,
2007
(audited)
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Year
Ended
December
31,
2006
(audited)
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Revenue
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$
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34,161
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$
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1,255,275
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$
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1,344,794
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$
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129,275
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Net
Income (Loss) for the Period
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$
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(355,790
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)
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$
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(1,088,374
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)
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$
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(1,524,054
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)
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$
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(1,239,507
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)
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Net
Income (Loss) Per Share
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$
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(0.005
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)
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$
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(0.022
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)
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$
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(0.027
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)
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$
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(0.041
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)
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As of
September
30, 2008
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As of
September
30, 2007
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As of
December
31, 2007
(audited)
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As of
December
31, 2006
(audited)
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Working
Capital
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$
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807,756
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$
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1,558,361
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$
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(5,893,663
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)
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$
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5,683,177
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Total
Assets
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$
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13,948,071
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$
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7,105,974
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$
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14,331,469
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$
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7,307,670
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Total
Number of Issued Shares of Common Stock
|
|
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73,081,168
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|
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50,002,908
|
|
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55,835,875
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30,294,665
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Accumulated
Deficit
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|
$
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(4,126,158
|
)
|
$
|
(3,334,693
|
)
|
$
|
(3,770,368
|
)
|
$
|
(2,246,314
|
)
|
Total
Stockholders’ Equity (Deficit)
|
|
$
|
3,512,093
|
|
$
|
4,476,112
|
|
$
|
3,957,359
|
|
$
|
5,650,044
|
|
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should
carefully consider the following material risks, together with the other
information contained in this prospectus, before you decide to buy our common
stock. If any of the following risks actually occur, our business, results
of
operations and financial condition would likely suffer. In these circumstances,
the market price of our common stock could decline, and you may lose all or
part
of your investment.
Risks
Related to Our Business
We
are an early stage company with a limited operating
history.
We
are an
early stage company that seeks to take advantage of a proprietary automation
process to produce solar modules and solar tiles at a lower cost. We have
experienced losses from our early stage operations, which have involved
developing and testing our new solar panel technology, construction of our
manufacturing facility, and commencement of the sales and distribution portions
of our business by manufacturing, selling, and installing solar tiles and
modules. We anticipate incurring additional losses over the next few years
as we
complete the development and testing of prototypes and the licensing of our
new
products and commence production and distribution. There is limited historical
financial or other information available upon which you can base your evaluation
of our business and prospects. We have not begun commercial production of solar
modules and solar tiles made using our proprietary automation process, and
at
this stage of our business plan, we have less insight into how market and
technology trends may affect our business than we expect to have in the future.
The revenue and income potential of our business is unproven. As a result,
you
should consider our business and prospects in light of our limited operating
history and the challenges that we will face as an early stage company seeking
to develop a new manufacturing process. If we are unable to develop our
business, we will not be able to achieve our goals and could suffer economic
loss, in which case you may lose your entire investment.
We
have incurred losses during prior fiscal periods and anticipate that we will
incur future losses until development, implementation and commercialization
of
our products manufactured through our new assembly processes are
operational.
From
inception through the three months ended March 31, 2008 and for the nine months
ended September 30, 2008, we incurred net losses and had negative cash
flows from operations. For the six months ended June 30, 2008, we recorded
net
income for the first time, although this was largely due to a one time gain
from
the sale of the Solar Plant on the roof of our manufacturing facility. Although
we plan to enter into commercial production in 2009, we expect to incur
additional losses over at least the next few years. Furthermore, we expect
to
continue to make significant capital expenditures and anticipate that our
expenses will increase, at least, in the near term as we continue to develop
our
manufacturing processes and our sales and distribution network, implement
internal systems and infrastructure, and hire additional personnel. As we do
not
expect to become profitable until after our new solar products are in
production, we will be unable to satisfy our current obligations solely from
cash generated from operations.
We
will require significant additional financing to fund expansion of our
operations, the availability of which cannot be assured, and if we are unable
to
obtain such financing, our business may fail.
To
date,
we have generated only limited revenue from the sale of solar tiles manufactured
by third parties and the related engineering services required to design and
install the same. During the period from January 2008 to June 2008, we also
generated revenue from the sale of electricity produced by our Solar Plant.
In
addition to this limited operating revenue, we have depended on sales of our
equity securities and debt financings to meet our cash requirements. Our ability
to expand our operations and to develop our technologies will depend upon our
ability to continue to generate revenue as well as to raise significant
additional financing. If we are unable to obtain such financing, we will not
be
able to develop our business. Specifically, we will need to raise additional
funds to:
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·
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support
our planned growth and carry out our business plan;
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·
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complete
construction of our new manufacturing facility and purchase related
equipment;
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continue
the research and development of our technologies;
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·
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protect
our intellectual property;
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·
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hire
top quality personnel for all areas of our business;
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·
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address
competing technological and market developments;
and
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·
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market
and develop our technologies.
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We
may
not be able to obtain additional equity or debt financing as required. Even
if
financing is available, it may not be on terms that are acceptable or favorable
to us or in sufficient amounts to satisfy our requirements. If we require,
but
are unable to obtain, additional financing in the future, we may be unable
to
implement our business plan and growth strategies, respond to changing business
or economic conditions, withstand adverse operating results or compete
effectively. More importantly, if we are unable to raise additional financing
when required, we may be forced to scale down our operations and our ability
to
generate revenue may be reduced.
We
may be unable to complete our development, manufacturing and commercialization
plans on schedule and failure to do so will significantly harm our business
plans, prospects, results of operations and financial
condition.
Commercializing
our new solar products and processes depends on a number of factors,
including:
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·
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further
product and manufacturing process
development;
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·
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development
and implementation of certain critical tools and large scale production
capabilities;
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·
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completion,
refinement and management of our supply chain;
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·
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completion,
refinement, and management of our distribution channels;
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·
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completing
construction to our manufacturing facility and building and operating
our
production line; and
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·
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demonstrating
efficiencies that will make our products attractively
priced.
|
Further,
we have focused primarily on research and development and on our manufacturing
processes and capabilities. We do not know whether the processes or products
we
have developed will be capable of supporting large-scale manufacturing that
meets the requirements for cost, schedule, quality, engineering, design,
production standards, field certification, and supply demands.
If
we experience significant delays, cost overruns or technical difficulties
installing equipment in our new manufacturing facility, our business plans,
prospects, results of operations and financial condition will suffer.
Completing
the installation of equipment at our manufacturing facility is subject to
significant risks, including risks of delays, equipment failure, cost overruns
and other start-up and operating difficulties. Our manufacturing processes
use
both off-the-shelf and custom-built equipment. To date, we have experienced
delivery and installation delays of a key piece of equipment in our new facility
by one of our suppliers. If we continue to experience such a delay or encounter
similar difficulties, we may be unable to complete our manufacturing facility
either in a timely manner or at all. Without our manufacturing facility, we
would likely have no manufacturing capacity and you could lose your entire
investment.
Our
products have never been sold on a mass market commercial basis, and we do
not
know whether they will be accepted by the market.
The
solar
energy market is at a relatively early stage of development and the extent
to
which solar modules will be widely adopted is uncertain. If our products are
not
accepted by the market, our business plans, prospects, results of operations
and
financial condition will suffer. Moreover, demand for solar modules in our
targeted markets, including Switzerland, Germany, France, the United States
and
Italy, may not develop or may develop to a lesser extent than we anticipate.
The
development of a successful market for our proposed products and our ability
to
sell our products at a lower price per watt may be affected by a number of
factors, many of which are beyond our control, including, but not limited to:
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·
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Our
failure to produce solar power products that compete favorably against
other solar power products on the basis of cost, quality and
performance;
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·
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Competition
from conventional energy sources and alternative distributed generation
technologies, such as wind energy;
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·
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Our
failure to develop and maintain successful relationships with suppliers,
distributors, systems integrators and other resellers, as well as
strategic partners; and
|
|
·
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Customer
acceptance of our products.
|
If
our
proposed products fail to gain sufficient market acceptance, our business plans,
prospects, results of operations and financial condition will
suffer.
We
depend upon a limited number of third-party suppliers for key materials, and
any
disruption from such suppliers could prevent us from manufacturing and selling
cost-effective products.
We
purchase the PV cells that we need for our proprietary technology and
manufacture our products using materials and components procured from a limited
number of third-party suppliers. We do not currently have in place any supply
contracts. If we fail to maintain our relationships with these suppliers, or
fail to secure additional supply sources from other PV cell suppliers that
meet
our quality, quantity and cost requirements in a timely manner, we may be unable
to manufacture our products or our products may be available only at a higher
cost or after a long delay. We may be unable to identify new suppliers or
qualify their products for use on our production lines in a timely manner and
on
commercially reasonable terms. Materials and components from new suppliers
also
may be less suited for our technology and yield PV modules with lower conversion
efficiencies, higher failure rates and higher rates of degradation than PV
modules manufactured with the materials and components from our current
suppliers. Any of these factors could prevent us from delivering our products
to
our customers within required timeframes, resulting in potential order
cancellations and lost revenue.
We
have relied on a small number of customers for substantially all of our sales
and the loss of, or a significant reduction in, orders from any of these
customers could significantly reduce our sales and operating
results.
We
have
historically sold our custom manufacturing services to only a few customers.
In
the fiscal year ended December 31, 2007, sales to our largest customer accounted
for approximately 89% of our total net sales. In the fiscal year ended December
31, 2006, sales to our largest two customers accounted for approximately 47%
and
39%, respectively, of our total net sales. Although we continued to market
our
solar tiles and to quote our solar PV turn-key installations to prospects during
the nine months ended September 30, 2008, we have been increasingly focused
on
completing our manufacturing facility and producing our solar products on a
large scale and less on smaller custom installation projects. To the extent
that
we are able to successfully manufacture and sell our products on a large scale,
we may still be exposed to the risks associated with reliance on one or a few
major customers. The loss of one of these potential customers or their default
in payment could significantly reduce our revenues and harm our operating
results in the future. Moreover, our customer relationships to date have been
developed over a relatively short period of time, and we cannot guarantee that
we will continue to receive significant revenues from these customers over
the
long term.
We
likely will face intense competition from manufacturers of crystalline silicon
solar modules, thin film solar modules and solar thermal and concentrated PV
systems, all of which represent direct substitutes for our
products.
The
solar
energy and renewable energy industries are both highly competitive and
continually evolving as participants strive to distinguish themselves within
their markets and compete with the larger more established electric power
industry. We believe that our main sources of competition are crystalline
silicon solar module manufacturers, thin film solar module manufacturers, and
companies developing solar thermal and concentrated PV
technologies.
At
the
end of 2007, the global PV industry consisted of more than 150 manufacturers
of
PV cells and solar modules. Within the PV industry, we face competition from
crystalline silicon PV cell and solar module manufacturers, including Trina
solar, Kyocera, Motech, QCells, Renewable Energy Corporation, Sanyo, Schott
Solar, Sharp, Mitsubishi, SolarWorld, GE Energy, Sunpower, Photowatt, Isofoton
and Suntech. We also face competition from thin film solar module manufacturers,
including Antec, Alwitra, UNI-Solar, Kaneka, Mitsubishi Heavy Industries, Shell
Solar, United Solar and several crystalline silicon manufacturers that are
developing thin film technologies. We may also face competition from
semiconductor manufacturers and semiconductor equipment manufacturers, or their
customers, several of which have already announced their intention to start
production of PV cells, solar modules or turnkey production lines or have bought
players in the PV industry. In addition to manufacturers of PV cells and solar
modules, we face competition from companies developing solar tiles or equivalent
(Solar century, Imerys, Atlantis and others). Most, if not all, of our
competitors across each of these segments are more established, benefit from
greater market recognition and have substantially greater financial,
development, manufacturing and marketing resources than us. If we are unable
to
effectively compete for customers and suppliers, our financial condition and
results of operations will suffer.
Technological
changes in the solar power industry could render our products obsolete, which
could prevent us from achieving sales and market share.
Our
failure to refine our technology and to develop and introduce new products
could
cause our products to become uncompetitive or obsolete, which could prevent
us
from increasing our sales and becoming profitable. The solar power industry
is
rapidly evolving and highly competitive. Our development efforts may be rendered
obsolete by the technological advances of others, and other technologies may
prove more advantageous for the commercialization of solar power products.
If
this occurs, our sales and profits could be diminished.
Failure
to protect our proprietary technology and intellectual property rights against
infringement could seriously impact our competitiveness and any litigation
related to protection of such intellectual property rights would be time
consuming and costly.
Our
success and ability to compete depends to a significant degree on our
proprietary technology, which consists of a combination of copyright, trademark,
and an international patent. If any of our competitors copy or otherwise gain
access to our proprietary technology or develop similar technologies
independently, we may not be able to compete as effectively. The measures we
have implemented to protect our proprietary technology and other intellectual
property rights are currently based upon a combination of a patent application,
contractual protections and trade secrets. These measures may not be adequate
to
prevent the unauthorized use of our proprietary technology and our other
intellectual property rights. Further, the laws of various countries in which
we
expect to offer our products may provide inadequate protection of such
intellectual property rights.
We
may be exposed to infringement or misappropriation claims by third parties
that
if determined adversely to us, could cause us to pay significant damage awards
or prohibit us from the manufacture and sale of our solar modules and tiles
or
the use of our manufacturing technology.
Our
success depends largely on our ability to use and to develop our technology
and
know-how without infringing or misappropriating the intellectual property rights
of third parties. The validity and scope of claims relating to PV technology
patents involve complex scientific, legal and factual considerations and
analysis and, therefore, may be uncertain. We may be subject to litigation
involving claims of patent infringement or violation of intellectual property
rights of third parties. The defense and prosecution of intellectual property
suits can be costly and time consuming. An adverse determination in any
litigation or proceeding could subject us to significant liability, require
us
to seek licenses from third parties that may not be available on reasonable
terms, require us to redesign our solar modules and tiles, or subject us to
injunctions prohibiting the manufacture and sale of our solar modules and tiles
or the use of our technologies.
One
of our directors, Christiane Erné, controls a substantial interest in us and
therefore may control certain actions requiring a stockholder
vote.
Christiane
Erné, a director since 2006, beneficially owns 66% percent of our outstanding
common stock. Christiane Erné is married to Daniel Erné, another of our
directors. As a result, Christiane Erné and Daniel Erné will be able to
determine the outcome of any decision upon which our stockholders
vote.
All
of our assets and a majority of our directors and officers are outside of the
United States, with the result that it may be difficult for investors to enforce
within the United States any judgments obtained against us or any of our
directors or officers.
Although
we are organized under the laws of the State of Delaware, our principal business
office is located in Geneva, Switzerland. As such, it may be difficult for
investors to enforce judgments against us that are obtained in the United States
in any action, including actions predicated upon civil liability provisions
of
the federal securities laws. In addition, the majority of our directors and
officers reside outside the United States, and nearly all of the assets of
these
persons and us are located outside of the United States. As a result, it may
not
be possible for investors to effect service of process within the United States
upon such persons or to enforce against us or such persons judgments predicated
upon the liability provisions of United States securities laws. There is
substantial doubt as to the enforceability against any of our directors and
officers located outside the United States in original actions or in actions
of
enforcement of judgments of United States courts or liabilities predicated
on
the civil liability provisions of United States federal securities laws. In
addition, as the majority of our assets are located outside of the United
States, it may be difficult to enforce United States bankruptcy proceedings
against us. Under United States bankruptcy laws, courts typically have
jurisdiction over a debtor’s property, wherever it is located, including
property situated in other countries. Courts outside of the United States may
not recognize the United States bankruptcy court’s jurisdiction. Accordingly,
you may have trouble administering a United States bankruptcy case involving
a
Delaware company as debtor with most of its property located outside the United
States. Any orders or judgments of a bankruptcy court obtained by you in the
United States may not be enforceable.
Currency
translation and transaction risk may negatively affect our net sales, cost
of
sales and gross margins and could result in exchange
losses.
Although
our reporting currency is the U.S. dollar, we conduct our business and
incur costs in Swiss Francs in which we operate. As a result, we are subject
to
currency translation and transaction risk. During the year ended December 31,
2007 and for the nine months ended September 30, 2008, all of our sales were
made outside of the United States and denominated in Swiss Francs. We expect
substantially all of our sales to be outside of the United States and
denominated in foreign currencies in the future. Changes in exchange rates
between foreign currencies and the U.S. dollar could affect our revenues
and cost of sales and could result in exchange gains or losses. We cannot
accurately predict the impact of future exchange rate fluctuations on our
results of operations.
Risks
Related to Our Industry
There
is a shortage of semi-conductor grade silicon, upon which our products depend.
Any continued shortage could impact our cost of sales and limit our revenue
growth.
Silicon
is an essential raw material in the production of PV cells. Currently there
is
an industry-wide shortage of silicon ingots, which has resulted in significant
price increases. Increases in silicon prices may impact our manufacturing costs
in the future. As demand for PV cells has increased, a number of manufacturers
have announced plans to add additional capacity. As this manufacturing capacity
becomes operational, it will increase the demand for silicon and further
exacerbate the current shortage. The production of silicon is capital intensive
and adding additional capacity requires significant lead time. We do not believe
that the supply imbalance will be remedied in the near term, and we expect
that
silicon demand will continue to outstrip supply for the next several months.
We
do not have any silicon supply contracts in place, and a continued shortage
in
supply could hurt our revenue growth.
The
reduction or elimination of government subsidies and economic incentives for
on-grid solar electricity applications could reduce demand for our solar
modules, lead to a reduction in our net sales and harm our operating
results.
The
reduction, elimination or expiration of government subsidies and economic
incentives for on-grid solar electricity could result in the diminished
competitiveness of solar energy relative to conventional and non-solar renewable
sources of energy, which would negatively affect the growth of the solar energy
industry overall and our net sales specifically. We believe that the near-term
growth of the market for on-grid applications, where solar energy is used to
supplement the electricity a consumer purchases from the utility network,
depends significantly on the availability and size of government and economic
incentives. Currently the cost of solar electricity substantially exceeds the
retail price of electricity in every significant market in the world. As a
result, federal, state and local governmental bodies in many countries, most
notably Germany, Italy, Spain, France, South Korea, Japan, Canada, the United
States, and, to a more limited extent, Switzerland, have provided subsidies
in
the form of tariffs, rebates, tax write-offs and other incentives to end-users,
distributors, systems integrators and manufacturers of PV products. For example,
Germany has been a strong supporter of PV products and systems, and political
changes in Germany could result in significant reductions or the elimination
of
incentives. Many of these government incentives could expire, phase-out over
time, exhaust the allocated funding or require renewal by the applicable
authority. A reduction, elimination or expiration of government subsidies and
economic incentives for solar electricity could result in the diminished
competitiveness of solar energy, which would in turn hurt our sales and
financial condition.
Existing
regulations and policies and changes to these regulations and policies may
present technical, regulatory and economic barriers to the purchase and use
of
PV products, which may significantly reduce demand for our solar
products.
The
market for electricity generating products is heavily influenced by foreign,
federal, state and local government regulations and policies concerning the
electric utility industry, as well as policies promulgated by electric
utilities. These regulations and policies often relate to electricity pricing
and technical interconnection of customer-owned electricity generation. In
a
number of countries, these regulations and policies have been modified in the
past and may be modified again in the future. These regulations and policies
could deter end-user purchases of PV products and investment in the research
and
development of PV technology. For example, without a mandated regulatory
exception for PV systems, utility customers are often charged interconnection
or
standby fees for putting distributed power generation on the electric utility
grid. These fees could increase the cost to our end-users of using PV systems
and make them less desirable, thereby harming our business, prospects, results
of operations and financial condition. In addition, electricity generated by
PV
systems mostly competes with expensive peak hour electricity, rather than the
less expensive average price of electricity. Modifications to the peak hour
pricing policies of utilities, such as to a flat rate, would require PV systems
to achieve lower prices in order to compete with the price of electricity
generated using other technologies.
We
may be vulnerable to the efforts of electric utility companies lobbying to
protect their revenue streams and from competition from such electric utility
companies.
Electric
utility companies could lobby for a change in the relevant legislation in their
markets to protect their current revenue streams. Any adverse changes to the
regulations and policies of the solar energy industry could deter end-user
purchases of PV products and investment in the research and development of
PV
technology. In addition, electricity generated by PV systems mostly competes
with expensive peak hour electricity, rather than the less expensive average
price of electricity. Modifications to the peak hour pricing policies of
utilities, such as flat rate pricing, would require PV systems to achieve lower
prices in order to compete with the price of electricity. Any changes to
government regulations or utility policies that favors electric utility
companies could reduce our competitiveness and cause a significant reduction
in
demand for our products.
Risks
Related to this Offering and Our Common Stock
Sales
of a substantial number of shares of our common stock into the public market
by
the selling stockholders may result in significant downward pressure on the
price of our common stock and could affect the ability of our stockholders
to
realize the current trading price of our common stock.
Sales
of
a substantial number of shares of our common stock in the public market
could
cause a reduction in the market price of our common stock. As of the date
of
this prospectus, we had 73,081,168 shares of common stock issued and
outstanding. We previously registered on behalf of certain of the selling
stockholders named in this prospectus the resale of up to 7,813,176 shares
of
our common stock in a registration statement on Form S-1 (File No. 333-140864)
that was declared effective April 11, 2008.
Approximately
5,163,176 of those shares remain unsold.
When
this
registration statement is declared effective, certain of these same selling
stockholders may be reselling up to an additional 4,726,370 shares of our
common
stock.
Any
significant downward pressure on the price of our common stock as the selling
stockholders sell their shares could encourage short sales by either the selling
stockholders or others. Any such short sales could place further downward
pressure on the price of our common stock.
Our
common stock is illiquid, and the price of our common stock may be negatively
impacted by factors which are unrelated to our operations.
Our
common stock currently trades on a limited basis on the OTC Bulletin Board.
The
market price of our common stock has fluctuated substantially due to a variety
of factors, including market perception of our ability to achieve our planned
growth, quarterly operating results of us or our competitors, trading volume
in
our common stock, changes in general conditions in the economy and the financial
markets or other developments affecting our competitors or us. In addition,
the
stock market has recently been subject to extreme price and volume fluctuations.
This volatility has had a significant effect on the market price of securities
issued by many companies for reasons unrelated to their operating performance
and could have the same effect on our common stock.
A
significant decline in the price of our common stock could affect our ability
to
raise further 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. Because a significant portion of our operations have been, and may
continue to be, financed through the sale of equity securities, a decline in
the
price of our common stock could be detrimental to our liquidity and 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 products and processes and to continue
our
current operations. If our 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.
Trading
of our stock may be restricted by the Securities and Exchange Commission’s penny
stock regulations, which may limit a stockholder’s ability to buy and sell our
securities.
Our
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than
established customers and accredited investors. A “penny stock” is any equity
security that has a market price less than $5.00 per share, subject to certain
exceptions. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver
a
risk disclosure document, which provides information about penny stocks and
the
nature and level of risks in the penny stock market. The broker-dealer also
must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction
and
monthly account statements showing the market value of each penny stock held
in
the customer’s account. In addition, the penny stock rules require that prior to
a transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock
is
a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit
the
marketability of our common stock.
FINRA
sales practice requirements may also limit a stockholder’s ability to buy and
sell our stock.
In
addition to the “penny stock” rules described above, the Financial Industry
Regulatory Authority (FINRA) has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Under
interpretations of these rules, FINRA believes that there is a high probability
that speculative low priced securities will not be suitable for at least some
customers. FINRA requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may limit your
ability to buy and sell our stock and have an adverse effect on the market
for
our shares.
Resales
of our securities may be restricted by state securities laws that prohibit
trading absent compliance, and these restrictions may make it difficult or
impossible to sell shares of our common stock in those
states.
Transfer
of our common stock may be restricted under the securities laws promulgated
by
various states and foreign jurisdictions, commonly referred to as “blue sky”
laws. Absent compliance with individual blue sky laws, our common stock may
not
be traded in such jurisdictions. Because the securities registered in this
offering have not been registered for resale under the blue sky laws of any
state, holders of such shares and persons who desire to purchase them should
be
aware that there may be significant state law restrictions upon the ability
of
investors to sell the securities and of purchasers to purchase them. These
restrictions could prohibit the secondary trading of our common stock. We do
not
intend to qualify our securities for resale in the states that do not offer
“manual” exemptions and which require shares to be qualified before they can be
resold. Accordingly, investors should consider the secondary market for our
securities to be a limited one. See “Plan of Distribution.”
FORWARD-LOOKING
STATEMENTS
This
prospectus contains forward-looking statements which relate to future events
or
our future financial performance. In some cases, you can identify
forward-looking statements by words such as “may”, “should”, “expects”, “plans”,
“anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or
the negative of these words or other comparable terms. Forward-looking
statements involve risks and uncertainties that may cause our actual results
or
performance to be materially different from those expressed in or implied by
the
forward-looking statements. These uncertainties include, among others, our
need
to raise additional financing; risks related to the development and
implementation of our new manufacturing processes and facility; risks related
to
completion, refinement and management of our supply chain and distribution
channels; risks related to current and future research and development; risks
related to customer acceptance of our products; risks related to competition
in
the solar energy field; risks related to the availability of public subsidies;
our history of losses; the historical volatility of our stock prices; general
market conditions; and the risks in the section entitled “Risk Factors,” that
may cause our historical and actual results, level of activity and performance
to be materially different from future results, level of activity, or
performance as expressed in or implied by these forward-looking
statements.
Except
as
may be required by applicable law, we do not undertake or intend to update
or
revise our forward-looking statements, and we assume no obligation to update
any
forward-looking statement contained in this prospectus or any prospectus
supplement as a result of new information or future events or
developments.
WHERE
YOU CAN FIND MORE INFORMATION
We
have
filed
an
amended
registration statement on Form S-1 with the Securities and Exchange Commission
(the “SEC”) to register the shares of our common stock being offered by this
registration statement, of which this prospectus is a part.
Pursuant
to Rule 429 of the Securities Act of 1933, as amended, this registration
statement also serves as post-effective amendment no. 1 to a registration
statement on Form S-1 (No. 333-140864) that was declared effective on April
11,
2008.
In
addition, we file annual, quarterly and current reports, proxy statements
and
other information with the SEC. You may read and copy any reports, statements
or
other information that we file at the SEC’s public reference room at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for
further information regarding the public reference facility. The SEC maintains
a
website at www.sec.gov that contains current and periodic reports, proxy
statements, information statements and other information regarding registrants
that file electronically with the SEC, including us.
USE
OF PROCEEDS
This
prospectus relates to shares of our common stock that may be offered and sold
from time to time by the selling stockholders. We will not receive any proceeds
from the sale of shares of common stock in this offering except upon the
exercise of outstanding warrants. We could receive up to $1.35 million from
the
exercise of the warrants held by one of the selling stockholders. We expect
to
use the proceeds received from the exercise of the warrants, if any, for working
capital and general corporate purposes. We will bear all expenses of
registration incurred in connection with this offering, but all commissions,
selling and other expenses incurred by the selling stockholders. We estimate
that our expenses in connection with the filing of this registration statement
will be approximately $29,000.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Price
Range of Common Stock
Our
common stock is quoted on the OTC Bulletin Board under the symbol “SESI.OB”. The
following table sets forth the high and low bid prices per share of our common
stock for the periods indicated.
|
|
High
|
|
Low
|
|
2006
|
|
|
|
|
|
First
Quarter
|
|
$
|
0.65
|
|
$
|
0.45
|
|
Second
Quarter
|
|
|
1.24
|
|
|
1.22
|
|
Third
Quarter
|
|
|
1.70
|
|
|
1.70
|
|
Fourth
Quarter
|
|
|
0.88
|
|
|
0.85
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
0.71
|
|
$
|
0.63
|
|
Second
Quarter
|
|
|
0.48
|
|
|
0.48
|
|
Third
Quarter
|
|
|
1.17
|
|
|
1.11
|
|
Fourth
Quarter
|
|
|
1.08
|
|
|
0.90
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
0.70
|
|
$
|
0.70
|
|
Second
Quarter
|
|
|
0.74
|
|
|
0.57
|
|
Third
Quarter
|
|
|
0.66
|
|
|
0.20
|
|
Fourth
Quarter (through
December
2,
2008)
|
|
|
0.35
|
|
|
0.10
|
|
On
December
2,
2008,
the closing price of our common stock, as reported by the OTC Bulletin
Board,
was $
0.20
per
share.
The
high
and low prices in the table reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions. The source
of
the high and low bid information is the OTC Bulletin Board Market.
Stockholders
The
approximate number of holders of record of our common stock as of
December
2,
2008 was
25, inclusive of those brokerage firms and/or clearing houses holding shares
of
common stock for their clientele (with each such brokerage house and/or
clearing
house being considered as one holder). As of
December
2,
2008, we
had 73,081,168 shares of common stock outstanding.
Dividend
Policy
We
have
never declared or paid dividends on our common stock. We do not intend to
declare dividends in the foreseeable future because we anticipate that we will
reinvest any future earnings into the development and growth of our business.
Any decision as to the future payment of dividends will depend on our results
of
operations and financial position and such other factors as our Board of
Directors, in its sole discretion, deems relevant.
DESCRIPTION
OF BUSINESS
We
are a
Delaware corporation engaged in the business of designing, engineering,
producing and installing solar panels or modules and solar tiles for generating
electricity. We conduct our operations through two wholly owned subsidiaries,
SES Prod. S.A. (“SES Production”) and SES Société d’Energie Solaire S.A. (“SES
Switzerland”). Our shares are quoted on the OTC Bulletin Board under the symbol
“SESI.OB”.
Overview
We
are a
renewable energy company that offers products and services focused on the
design, development and commercialization of a portfolio of solar products
and
technologies capable of delivering alternative energy solutions. To date, we
have produced and installed custom photovoltaic (“PV”) solar products for
commercial, industrial and residential use. Based on the specific needs of
our
customers, we manufacture our solar modules and solar tiles using cells,
components and other raw materials that are supplied to us from third-parties.
We also offer comprehensive engineering services for PV projects. As an
engineering service provider, we design new methods of manufacturing PV modules,
and we incorporate these modules into the specific architectural and building
applications of our customers.
We
are
actively engaged in transforming our business from a custom manufacturer of
solar modules and tiles into a large scale producer and manufacturer of solar
modules and tiles using our proprietary assembly processes at our new
manufacturing facility in Geneva, Switzerland, which we believe will allow
for
higher quality electrical contacts, better performance and reduced
costs.
The
Photovoltaic Solar Industry
Renewable
energy sources for electric power generation include hydroelectric, biomass,
geothermal, wind and solar. Among renewable sources of electricity, solar energy
has the most potential to meet the world’s growing electricity needs. According
to the U.S. Department of Energy, the sun is the only source of renewable energy
that has a large enough resource base to meet a significant portion of the
world’s electricity needs.
Solar
electricity is generated using either PV or solar thermal technology to extract
energy from the sun. PV electricity generating systems directly convert the
sun’s energy into electricity, whereas solar thermal systems heat water or other
fluids that are then used as sources of energy. PV systems are either
grid-connected systems or off-grid systems. Grid-connected systems are connected
to the electricity transmission and distribution grid and feed solar electricity
into the end-user’s electrical system and/or the grid. These systems are
commonly mounted on the rooftops of buildings, integrated into building facades
or installed on the ground using support structures, and they range in size
from
2-3 kilowatts to multiple gigawatts (GW) and megawatts (MW). Off-grid PV systems
are typically much smaller and are frequently used in remote areas where they
may be the only source of electricity for the end-user.
PV
systems are currently the most widely used method of transforming sunlight
into
electricity. Annual installations by the PV industry grew from 0.4GW in 2002
to
1.7GW in 2006 and 2.9 GW at the end of 2007, representing a 70% increase in
one
year. Cumulative installed capacity reached just below 10GW at the end of 2007.
Growth
in
installed solar power systems has been stimulated by long-term government
subsidies, tax incentives and feed-in tariffs that require utilities to buy
back
excess power generated by privately owned PV systems. Over time, we expect
costs
to decline as a result of new fabrication techniques, the development of PV
cell
technologies that use alternative lower-cost materials, reductions in the amount
of silicon used in PV cells, partly through the development of thin film
technologies, improvements in module performance as a result of greater PV
cell
energy efficiency, lower direct manufacturing costs, and economies of scale
as
production volumes rise.
In
2007,
Germany was the world’s leader in MW volume of PV installations with 50%,
followed by Spain with 13%, Japan with 10%, Italy with 7% and the U.S. with
7%,
according to industry publication Solarbuzz LLC. Germany’s and Japan’s
historical dominance is attributable to their respective government incentive
programs, which are designed to stimulate market demand for PV systems. Other
European countries have adopted, or are adopting, similar government incentive
programs, as are countries in Asia and several states in the U.S., including
California. The California Public Utilities Commission reports that the
California Solar Initiative has committed $2.9 billion in incentives over
10 years with the goal of supporting installations of 3GW new installed
capacity by 2017.
The
market for grid connected PV power has undergone significant growth over the
last several years, expanding 57% in 2004 alone, according to the U.S.
Department of Energy. Industry reports indicate that on-grid applications
represent the largest and fastest growing segment of the global market,
accounting for 77% of the market. According to Solarbuzz LLC, PV world market
sales were up 34% in 2005. The PV industry generated $17.2 billion in global
revenues in 2007.
Advantages
and Disadvantages of Solar Energy
Solar
energy generated through PV systems has several advantages compared to
conventional and other renewable sources of electricity, including security,
reliability, low maintenance, modularity and flexibility of design, as well
as
significant environmental benefits. PV systems also support the trend toward
distributed (point-of-use) power generation. We believe that capacity
constraints, increased demand for power reliability, and the challenges of
building new centralized power plants will increase the demand for distributed
power generation.
Solar
energy generated through PV systems also has certain disadvantages. Perhaps
the
most significant is the high initial cost of individual PV systems. Solar power
can cost twice as much as grid power. This is due almost entirely to the high
cost of PV cells, which depends on the cost and availability of semiconductor
grade silicon. While technical developments are underway in thin film, membrane
and other non-crystalline based materials, over 85% of the industry currently
relies on crystalline silicon cells.
Description
of Our Products
To
date,
we have produced and installed custom PV solar products for commercial,
industrial and residential use. Based on the specific needs of our customers,
we
manufacture our solar tiles using cells, components and other raw materials
that
are supplied to us by third-parties. The design, production and installation
of
these customized solar products has required that we offer comprehensive
engineering services. As an engineering service provider, we design new methods
of manufacturing PV modules, and we incorporate these modules into the specific
architectural and building applications of our customers. As we near completion
of our manufacturing facility and implement our proprietary manufacturing
processes, as more fully described below, we will, through our wholly owned
subsidiary, SES Production, focus our attention less on custom design and
installation projects and more on mass manufacturing, producing and offering
the
following products:
Solar
Tiles: SunTechTile® and Swisstile®
We
have
developed a new technology for the production, distribution and sale of a next
generation solar tile that we intend to brand under the SunTechTile® trademark
on the international market and under the Swisstile® trademark in Switzerland.
SunTechTile® and Swisstile® share the same design but will be marketed under
different names in order to distinguish their targeted markets. The SunTechTile®
and Swisstile® solar tiles maximize power output by utilizing the latest
generation PV cells in an innovative connector design that incorporates
ultra-thin, invisible connectors, which we believe makes the cells easier to
install and less expensive. This new connector design also reduces power loss,
thereby maximizing efficiency. These tiles will be manufactured on our fully
automated production line, described below, which will allow for a shorter
manufacturing cycle and lower cost.
The
SunTechTile® and Swisstile® solar tiles will be manufactured by us from slate
procured from our primary supplier, Swiss Eternit. We plan to secure long-term
supply contracts for cells when preliminary testing of our new tile design
has
been completed, which we expect to be in the first half of 2009.
High
Power Rated Modules
We
also
intend to manufacture high power rated modules, which are packaged
inter-connected assemblies of PV cells. Our modules will incorporate
back-contact cells that have reduced visibility and therefore increased
architectural appeal. Our goal is to successfully demonstrate that our
production line is well-suited to these particular back-contact cells. We will
therefore manufacture only a limited number of modules that we intend to sell
either on the open market or to third parties interested in purchasing or
licensing production lines from us.
Description
of Our Proprietary Manufacturing Processes
We
have
developed and patented a new assembly process that is based on our proprietary
technology that will allow us to produce solar modules and solar tiles at a
lower cost and in a more time efficient manner, thereby resulting in more
attractively priced products. Our new facility in Geneva will showcase our
new production line and, we believe, will enable us to successfully demonstrate
our enhanced manufacturing capabilities to produce solar PV
modules.
Our
proprietary production process, which we expect to be fully operational in
early
2009, consists of an automated assembly technology that we believe guarantees
a
more reliable and efficient manufacturing process. This is because our new
technology allows for back-contact PV cells and soldering to occur during only
one production run, which is faster and is more automated than existing
manufacturing processes for these types of cells. As a result of this
new assembly technology, we anticipate that our production line will be
significantly smaller than traditional production lines that use standard
tabbing and stringing machines and approximately three times faster. We
further believe that our new manufacturing process has numerous advantages
over
existing assembly techniques, including easier and faster electrical connections
between cells and strings in a module and fewer manufacturing steps, thereby
resulting in reduced production time and greater throughput. Our automated
manufacturing process also significantly reduces manual labor requirements,
a
significant cost component in the PV industry, which will result in greater
capital productivity, lower costs, more reliable connections, more consistent
performance, and less waste.
In
addition to the above described assembly technique, our patent also applies
to
the connection of modules (of any cell type) to junction boxes in a more
efficient manner, resulting in a 1% - 3% reduction in the use of glass material
and encapsulate, depending on the type of module.
We
plan
to use our patented manufacturing process and back-connection techniques at
our
new facility to produce standard PV modules and next generation integrated
roof
tiles. In the future, we may also consider licensing this technology to other
PV
module producers as well as selling to third parties complete production lines
that we develop.
With
its
low heating demand and large PV roof, we believe that our manufacturing facility
will be a showcase for PV technology, with special solar windows on one facade
and a roof generating more than enough power to satisfy the facility’s energy
requirements. In January 2008, we received confirmation that the building meets
the MINERGIE
®
standard, which is a sustainability brand for new and refurbished buildings
that
is mutually supported by the Swiss Confederation, the Swiss Cantons along with
Trade and Industry and is registered in Switzerland and around the world.
The final MINERGIE
®
certificate
is expected to be delivered upon completion of the building. In September 2008,
the building was awarded the 2008 Swiss Solar Award for architectural
integration of PV solutions. We have also been nominated for the 2008 European
Solar Award which will be announced in Berlin in December. We manage this
facility through our wholly owned subsidiary, SES Switzerland.
Sales
and Marketing
Although
the solar energy market is at a relatively early stage of development, energy
experts and associations forecast a CAGR of 30% to 40% for the solar PV market
between 2007 and 2010. To date, our operations have consisted of providing
custom manufactured solar tiles and related engineering services to customers
in
Switzerland. As such, we have primarily focused our marketing and sales efforts
in Switzerland.
Once
we
complete construction of our manufacturing facility, our expansion plans and
target markets will expand to include Germany, France, Spain Italy and the
U.S.
However, it should be noted that the solar energy market is at a relatively
early stage of development. Its future growth could be different from
expectations, and the extent to which our products will be adopted is completely
uncertain.
We
intend
to promote our PV solutions through trade publications, attendance at key
industry trade shows, direct mail campaigns, online advertising and relationship
marketing to our expanding network of dealers and solar integrators. Our
marketing activities will be of greater importance beginning in 2009 once our
production line becomes fully operational.
Customers
Most
of
our revenue to date has been generated by sales of custom manufactured solar
modules and tiles and related engineering services to customers, which have
included:
|
·
|
suppliers
of modules (i.e., either integrator PV systems or cell manufacturers
willing to outsource the module production to us, using our proprietary
technology to assemble components in a module) to end-user consumers;
|
|
·
|
engineering
firms, installers, distributors or end users (public or private)
of our
solar tiles;
|
|
·
|
architects,
public authorities or end users of our engineering services in PV
turnkey
installations; and
|
|
·
|
potential
module manufacturers licensing our
technology.
|
In
the
fiscal year ended December 31, 2007, sales to our largest customer accounted
for
approximately 89% of our total net sales. In the fiscal year ended December
31,
2006, sales to our largest two customers accounted for approximately 47% and
39%, respectively, of our net sales. The loss of one or more of our largest
customers or their default in payment could significantly reduce our revenues
and harm our operating results.
Suppliers
and Process Equipment Providers
We
rely
on several companies to supply certain components and materials used to
manufacture and produce our PV modules and tiles. For module and tile
production, we depend on a limited number of suppliers for back contact cells.
We believe that due to increased demand for back contact cells, additional
suppliers have already entered the market. We acquire cells on a purchase order
basis and do not have long-term supply contracts with any suppliers, although
we
may enter into such contracts in the future. We purchase slates from Swiss
Eternit, with which we have a long-standing commercial relationship. We do
not
believe a risk of inventory shortage exists with respect to tiles, although
if
one did, we believe alternate suppliers exist. Recent changes in the dimensions
of some solar cells, however, could require larger slates, which exist at the
prototype level from our suppliers but whose availability on a large scale
is
not yet proven.
Our
manufacturing processes use both off-the-shelf and custom-built equipment.
Our
equipment providers have had difficulty finalizing our order for certain
custom-built machinery to be installed in our new facility. Based on our
patented technology, the manufacturing concept we will employ in our facility
is
new and an important machine that we expected to have in 2007 has yet to be
delivered. Delays delivering this machine by the supplier have postponed
production at our manufacturing facility. We expect that this machine will
be
delivered and tested by the end of 2008, although its ability to satisfy our
manufacturing requirements remains unproven.
Competition
We
face
competition from domestic and international companies actively engaged in the
manufacturing and distribution of solar PV systems, as well as from emerging
technology companies that may become viable in the next several years. The
best
funded and most established producers of PV cells and modules include Sharp
Corporation, Kyocera Corporation, Sunpower, Suntech, Qcells, Solarworld, Schott
Solar, BP Solar, Shell, Tenesol, Isofoton, Powerlight and GE Solar (formerly
AstroPower). Because most, if not all, of our competitors have substantially
greater capital resources and more experience in research and development,
manufacturing and marketing than we do, we may not succeed in the continued
commercialization and development of our products. We believe, however, that
our
building-integrated solar roofing products have advantages over most other
PV
product offerings. In most cases, competitors produce modules that must be
rack
mounted externally to a building, creating potential damage to the structure,
generating maintenance problems and detracting from their visual appearance.
Our
PV product offerings differ in this respect because they maximize power output
using the latest generation PV cells in an innovative design that incorporates
ultra-thin, invisible connectors between cells. This new connector design
reduces power loss and increases efficiency.
Both
the
traditional and the alternative energy industries are highly competitive.
Numerous entities in the U.S. and elsewhere compete with us to develop new
and
different alternative and/or renewable energy technologies. Competitors also
include fossil fuel companies such as Exxon, Shell, BP, and Total. We face,
and
expect to continue to face, competition from these entities to the extent that
they develop products that function similarly or identically to our
technologies.
Barriers
to entering the PV module and tile manufacturing industry include the technical
know-how required to produce solar cells that maintain acceptable efficiency
rates at competitive production costs. In addition, any new PV solar technology
would require successful demonstration of reliability testing prior to
widespread market acceptance. We believe the principal competitive factors
in
the market for solar electric power products are: price per watt, long-term
stability and reliability, conversion efficiency and other inherent performance
measures, ease of handling and installation, product quality, reputation, and
environmental factors.
Research
and Development
Our
research and development expense consists primarily of salaries and personnel
related costs and the cost of products, materials and outside services used
in
our research and development processes and product development activities.
During the fiscal years ended December 31, 2007 and 2006, we spent $426,814
and
$151,246, respectively, on research and development. For the nine months ended
September 30, 2008 and 2007, we spent $279,539 and $322,174, respectively,
on
research and development. We expect our research and development expense to
increase in absolute terms in the future as we increase personnel and research
and development activity. We intend to devote a substantial amount of our future
cash flows into research and development due to the new and evolving nature
of
the PV industry. Over time, we expect research and development expense to
decline as a percentage of net sales and on a cost-per-watt basis as a result
of
economies of scale.
Intellectual
Property
We
rely
on a combination of copyright, trade secret, trademark and contractual
protections to establish and protect our proprietary rights. We require our
customers to enter into confidentiality and nondisclosure agreements before
we
disclose any sensitive aspects of our solar technologies or strategic plans,
and
we typically enter into proprietary information agreements with employees and
consultants. Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy or otherwise obtain and use our technology. It
is
difficult to monitor unauthorized use of technology, particularly in foreign
countries where the laws may not protect our proprietary rights as fully as
laws
in the U.S. In addition, our competitors may independently develop technology
similar to ours. Our precautions may not prevent misappropriation or
infringement of our intellectual property.
We
have
filed a patent application for our new assembly technology. The application
was
filed with the World Intellectual Property Organization on July 3, 2006. On
October 24, 2007, the international report on our PCT/IB2007/000428 was issued.
The report recognizes that 12 of the 14 patent claims are new and that all
have
potential for industrial application.
Government
Regulation
Currently
the cost of solar electricity substantially exceeds the retail price of
electricity in every significant market in the world. To nurture the development
of solar electricity, government bodies in many countries, most notably Germany,
Italy, Spain, France, South Korea, Japan, Canada and the U.S. have provided
some
level of subsidies in the form of feed-in tariffs, net metering programs,
renewable portfolio standards, rebates, tax incentives and low interest
loans.
Under
a
feed-in tariff subsidy, the government sets prices that regulated utilities
are
required to pay for renewable electricity generated by end-users. The prices
are
set above market rates and may be differentiated based on system size or
application. Net metering programs enable end-users to sell excess solar
electricity to their local utility in exchange for a credit against their
utility bills. Net metering programs are usually combined with rebates, and
do
not provide cash payments if delivered solar electricity exceeds their utility
bills. Under a renewable portfolio standard, the government requires regulated
utilities to supply a portion of their total electricity in the form of
renewable electricity. Some programs further specify that a portion of the
renewable energy quota must be from solar electricity.
Tax
incentive programs exist in the U.S. at both the federal and state level, and
can take the form of investment tax credits, accelerated depreciation and
property tax exemptions. Several governments also facilitate low interest loans
for PV systems, either through direct lending, credit enhancement or other
programs.
We
believe that the near-term growth in the solar energy industry depends
significantly on the availability and size of these government subsidies and
on
the ability of the industry to reduce the cost of generating solar electricity.
The market for solar energy products is, and will continue to be, heavily
dependent on public policies that support growth of solar energy and, as a
result, the continuation of such policies and level of support present the
greatest uncertainties for our products. For example, there are some indications
that regulations in Germany, a major European market for our products and
services, may change unfavorably with regard to solar or PV electricity as
discussions are ongoing about modifying the German Renewable Energy Law, or
the
EEG. If Germany reduces or eliminates the subsidies under the EEG or implements
other unfavorable regulations, this would have a major impact on the solar
PV
market and adversely affect our growth prospects. Other countries, such as
Italy
and Greece, have established incentives to increase solar PV energy production,
creating new opportunities for PV products, although there is no guarantee
this
will occur or that such incentives will be available to us.
Switzerland
recently enacted a new federal feed-in tariff subsidy effective May 2008. Due
to
overwhelming demand, final subsidy decisions by the relevant Swiss grid
authority regarding remuneration for electricity generated by solar power
installations have been delayed. As a result of this delay, most solar power
producers in Switzerland, including our prospective and potential customers,
are
awaiting determination by the Swiss grid authority before undertaking new solar
power installations in order to learn whether their respective installations
will qualify for remuneration. While we expect that decisions will be made
during 2009, any additional significant delays could impact our projected growth
plans.
Employees
As
of
September 30, 2008
,
we had
four full-time employees, two of which are engineers. We periodically hire
consultants as independent contractors. As of September 30, 2008, we had three
such consultants. We intend to hire approximately ten additional employees
upon
the completion of our new manufacturing facility.
Corporate
History
We
were
incorporated in Nevada on February 3, 1999 to operate an Internet-based auction
website over which users advertised and bought and sold goods and services
for a
fee. Effective March 31, 2004, we changed our state of domicile from Nevada
to
Delaware. During the third quarter of 2005, we abandoned our Internet auction
business plan and focused on identifying suitable businesses with which to
enter
into a business opportunity or business combination.
Effective
June 19, 2006, we changed our name from “The Electric Network.com, Inc.” to
“Solar Energy Sources Inc.” On August 10, 2006, we changed our name to “SES
Solar Inc.” We effected the name change in contemplation of entering into the
share exchange agreement dated August 31, 2006 with SES Switzerland and the
shareholders thereof.
As
a
result of the share exchange agreement, we acquired SES Switzerland on September
27, 2006 in a so-called “reverse merger” transaction. The terms of the
transaction were negotiated at arm’s-length between unaffiliated parties and did
not require shareholder approval. As a result of the transaction, a change
of
control occurred as the former SES Switzerland stockholders acquired 70% of
the
outstanding shares of our common stock, and we ceased being a “shell company” as
such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934,
as
amended (the “Exchange Act”).
Description
of Property
Our
principal office is located in Plan-les-Ouates, a suburb of Geneva,
Switzerland.
We
were
granted a 60 year lease to land in Plan-les-Ouates upon which to build our
new
manufacturing facility. Rent for the entire 60-year term of the lease is
CHF72,065 ($60,120) per year, commencing on July 1, 2006. We received
authorization to build our manufacturing facility on the property from the
State
of Geneva on May 27, 2005 and we commenced construction of the facility in
the
second half of 2007.
We
rent a
1,654 square meter building in Härkingen, Switzerland, from Drei Linden AG
pursuant to a lease agreement for a monthly cost of CHF7,232 ($6,033). The
lease
agreement may be terminated with six months’ notice.
We
also
rent a 154 square meter office space in Plan-les-Ouates from Cool SA pursuant
to
a lease agreement dated March 23, 2001 which was subsequently cancelled and
replaced by a lease agreement dated February 20, 2002. The lease varies annually
on the basis of the Swiss consumer index. For 2007 the cost was CHF52,104
($43,467). The lease agreement was originally for a five-year term and is
automatically renewed annually unless terminated with one years’ notice. The
lease agreement was renewed in February 2008 on the same terms and conditions.
Legal
Proceedings
As
of the
date of this prospectus, we are not party to any pending lawsuit or legal
proceeding.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS
OF OPERATIONS
The
following discussion should be read in conjunction with the consolidated audited
financial statements and related notes, and the consolidated interim financial
statements and related notes that appear elsewhere in this registration
statement, of which this prospectus forms a part.
Our
business was commenced in 2001 by SES Société d’Energie Solaire SA (“SES
Switzerland”), a Swiss-based developer of solar panels and solar roof tiles. On
September 27, 2006, we completed a share exchange agreement with SES Switzerland
in which SES Switzerland became our wholly owned subsidiary. We then abandoned
our previous Internet-based auction website business and SES Switzerland’s
business of designing, engineering, producing, and installing solar panels
or
modules and solar tiles became the sole business of the combined company.
Because we and our subsidiaries on a consolidated basis are the successor
business to SES Switzerland, and because the operations and assets of SES
Switzerland represent our entire business and operations from the closing date
of the share exchange agreement, the following discussion and analysis is based
on SES Switzerland’s financial results for the relevant periods.
Overview
This
overview addresses our plan of operation and the trends, events, and
uncertainties that have been identified by our management as those that we
believe are reasonably likely to materially affect the comparison of historical
operating results reported herein to either past period results or to future
operating results.
We
have
developed and patented a new assembly technology for solar modules and solar
tiles. Our business plan includes the development of a new assembly line based
on our proprietary technology, using a manufacturing facility in the suburbs
of
Geneva, Switzerland that is currently under construction, to produce solar
modules and solar tiles at a lower cost. We believe this new facility will
enable us to produce solar photovoltaic (“PV”) modules that are larger than
three square meters.
To
implement our business plan, we will need to complete the design of the solar
modules and solar tiles, manufacture and test the prototype panels, have them
approved in accordance with European and other standards, manufacture them
in
series and sell them in major markets in Europe and eventually other countries
around the world. Our plan is to complete the manufacturing facility in December
2008 and commence production and sale of our new products in the first or second
quarter of 2009.
To
date,
we have generated only limited revenue from the sale of solar modules and solar
tiles manufactured by third parties and the related engineering services
required to design and install the same. In addition, during the period from
January 2008 to June 2008, we generated revenue from the sale of electricity
produced by our Solar Plant. We no longer expect to generate such revenue from
the sale of electricity, as we sold the Solar Plant to a third party in June
2008.
Once
our
manufacturing capabilities are operational, we will have available a product
line consisting of our SunTechTile® and SwissTile®
solar
tiles and, in the future, our high power rated solar modules. Historically,
we
have relied upon third-party vendors to supply us with component parts, such
as
PV cells, in order to manufacture and produce our products. As a result of
our
new manufacturing facility and our proprietary technology for module assembly,
we believe that we are positioning ourselves to manufacture and produce our
solar products on a much larger scale and one that is competitive in the solar
energy market.
We
have
experienced operating losses from our early stage operations, which have
involved developing and testing our new solar panel technology and commencement
of the sales and distribution portions of our business by selling custom solar
modules and solar tiles using an early stage technology. We anticipate incurring
additional operating losses over the next few years as we complete the
development, testing, prototypes and licensing of our new products and commence
production. Our research and development costs and the costs incurred in
manufacturing prototypes have been expensed to date. We do not believe that
we
can achieve profitability until development, implementation and
commercialization of our solar products manufactured through our new assembling
processes are operational.
We
believe the demand for solar modules and solar tiles will ultimately be
substantial. According to the Energy Information Administration, global demand
for electricity is expected to increase from 16.4 trillion kilowatt hours in
2004 to 30.3 trillion kilowatt hours in 2030. Over time, supply constraints,
rising electricity prices, dependence on foreign countries for fuel feedstock
and environmental concerns could limit the ability of many conventional sources
of electricity and other alternative sources to supply this rapidly expanding
global demand. According to the U.S. Department of Energy, solar energy is
the
only source of renewable power with a large enough resource base to supply
a
significant percentage of the world’s electricity needs over the next several
decades.
However,
over the near term there are significant competitive concerns with solar energy.
As the cost of producing electricity from grid connected PV installations is
higher than the current cost of electricity from fossil or nuclear plants,
the
PV market relies heavily on government subsidies and regulation concerning
independent power producers. These regulations favor PV electricity in some,
but
not all, countries. Existing regulations are subject to change due to local
political factors affecting the energy market, especially in Europe, where
the
process has been ongoing for 10 years. The major PV market in Europe is Germany,
where the EEG law governs. We expect France will play an increasing role in
the
future due to recently enacted laws. Other countries, including Italy, Spain
and
Greece, have similar but less favorable laws. The PV market is heavily dependent
on public policies and, as a result, such policies present the greatest
uncertainties for our products. Anticipated reductions of the feed-in tariff
in
Germany and Switzerland by 9% and 8%, respectively, per year could affect our
sales. Spain has already spoken of decreasing the tariff during 2008 by
20%. Without continued and/or enhanced governmental support in the form of
favorable laws and subsidies, the projected growth of the PV market will not
exist, which could hurt our results of operations.
Our
primary market for our SwissTile® product will be Switzerland, which recently
enacted a new feed-in tariff that became effective May 2008. This tariff has
10
different values depending on PV integration and size. Due to the properties
of
our SwissTile® product, we believe that it will receive the highest value, which
will be favorable for us.
Due
to
overwhelming demand, final subsidy decisions by the relevant Swiss grid
authority regarding remuneration for electricity generated by solar power
installations have been delayed. As a result of this delay, many of our
prospective and potential solar power production customers have postponed new
solar power installation as they await determination by the Swiss grid authority
in order to learn whether their respective installations will qualify for
remuneration. While we expect that decisions will be made during 2009, any
additional significant delays could impact our projected growth plans. The
tariff will decrease for new entrants by 8% every year starting in
2010.
Worldwide,
annual installations by the PV industry grew from 0.4GW in 2002 to 1.7GW in
2006, representing an average annual growth rate of over 42%, and 2.9GW at
the
end of 2007, representing a 70% increase in one year. Cumulative installed
capacity reached just below 10GW at the end of 2007. Despite this growth, solar
electricity still represents a small fraction of the supply of electricity.
So
long as governments and the market are focused on the ability of manufacturers
to develop new technologies that reduce the cost of solar electricity, we
believe that the demand for solar energy products will continue to grow
significantly. This growth projection is based on continued governmental
support, on the success of such manufacturing efforts to reduce the gap between
the cost of solar electricity and more conventional and established methods
of
generating electricity, and on other developments affecting the world energy
market. In addition to the uncertainties associated with government subsidies
and these other factors, it is also possible that breakthrough technologies
might emerge in other areas that will reduce demand for new solar energy
products. Furthermore, even within the solar energy area, it is possible that
developments in thin films or nanoscience could reduce the cost of PV cells
or
that continued shortages in the supply of polysilicon, an essential raw material
in the production of our PV cells, could impact our proposed new products and
adversely affect our plan of operation.
We
are in
ongoing discussions with strategic partners, including cell manufacturers,
PV
line manufacturers and special machine manufacturers to assist us with our
new
technology for module assembly. We are also progressing with construction of
our
manufacturing facility, which is expected to be fully operational during the
first half of 2009.
During
the nine months ended September 30, 2008, we continued to market our solar
tiles
and to quote our solar PV turn-key installations to prospects. In addition,
we
generated revenue of $34,161 and incurred costs of goods sold of $3,092. The
decrease in revenue and corresponding decrease in cost of goods sold over the
period are attributable to management’s increased focus on completing our
manufacturing facility and producing our solar products on a large scale and
away from smaller custom installation projects. The Solar Plant, which is housed
on the roof of our manufacturing facility and operational since December 2007,
generated revenue of $247,730 through June 30, 2008. As of the end of June
2008,
we no longer generate such revenue due to the sale of the Solar Plant to
Services Industriels de Geneve (“SIG”).
Based
on current and planned custom installation projects that will be completed
during the third and fourth quarters of 2008, we believe that our cash flow
from
operating activities for the remainder of fiscal year 2008 will be greater
than
our cash flow from operating activities during 2007. As previously reported,
and
in light of these projects, we believe that our operating expenses in fiscal
2008 will be approximately $2 million, which we anticipate financing through
revenue generated from operating income and with available cash. During the
remainder of 2008 and the first half of 2009, management anticipates total
capital expenditures of approximately $18 million for the new manufacturing
facility, of which we have already financed $10.5 million, and $3.5 million
for
the assembly line and related machinery, of which we have already financed
$389,000. We also may require up to an additional $11 million during the next
12
months to finance the purchase of raw materials to be used in the production
of
2 megawatts of solar tiles. We anticipate financing the remaining capital
expenditures on the facility and assembly line through available cash, loans
and
lines of credit, but we will likely also need additional financing in order
to
purchase raw materials and expand our operations once our manufacturing facility
is fully operational. We will also require enhanced liquidity in order to secure
long-term silicon supply contracts. We do not have any current agreements in
place to secure such financing.
We
entered into a credit facility of CHF4,500,000 ($4,13,144) on September 18,
2007
with the Geneva (Switzerland) State Department of Energy (“ScanE”). The proceeds
were received on October 1, 2007 and became due on March 17, 2008. On June
20,
2008, we announced the sale of our Solar Plant for gross proceeds of
CHF5,716,788 ($5,496,383), inclusive of VAT. We received substantially all
of the proceeds from this sale on June 30, 2008 and used a portion of the
proceeds to repay in full the CHF4,500,000 loan as of July 2, 2008.
We
expect
to continue to experience losses from operations until we can generate revenue
from manufacturing our new products. As a result of our continuing need to
expand our operations and develop and market our new products, we expect to
continue to need additional capital over the long-term in order to continue
as a
going concern.
RESULTS
OF OPERATIONS
COMPARISON
OF NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
Statement
of Operations
|
|
For
the Nine Months Ended
September
30,
|
|
(unaudited)
|
|
2008
|
|
2007
|
|
|
|
in
$
|
|
Total
revenues
|
|
|
34,161
|
|
|
1,255,275
|
|
Total
cost of goods sold (exclusive of depreciation shown separately
below)
|
|
|
(3,092
|
)
|
|
(1,039,496
|
)
|
Personnel
|
|
|
405,957
|
|
|
263,597
|
|
Rent
and lease expenses
|
|
|
112,956
|
|
|
99,336
|
|
Research
and development
|
|
|
279,539
|
|
|
322,174
|
|
Depreciation
and amortization
|
|
|
50,829
|
|
|
39,005
|
|
General
and administrative expenses
|
|
|
673,163
|
|
|
832,888
|
|
Interest
expense
|
|
|
(322,520
|
)
|
|
(49,959
|
)
|
Interest
income
|
|
|
46,756
|
|
|
140,096
|
|
|
|
|
|
|
|
|
|
Foreign
exchange gain (loss)
|
|
|
79,493
|
|
|
162,705
|
|
Total
other income (expense)
|
|
|
(196,271
|
)
|
|
252,842
|
|
Taxes
|
|
|
0
|
|
|
0
|
|
Net
income (loss) from continuing operations
|
|
|
(1,687,646
|
)
|
|
(1,088,379
|
)
|
Income
(loss) from discontinued operations
|
|
|
1,331,856
|
|
|
0
|
|
Taxes
|
|
|
0
|
|
|
0
|
|
Net
income (loss) from discontinued operations
|
|
|
1,331,856
|
|
|
0
|
|
Net
income (loss)
|
|
|
(355,790
|
)
|
|
(1,088,379
|
)
|
Other
comprehensive income (loss): translation adjustment
|
|
|
(89,476
|
)
|
|
(85,553
|
)
|
Comprehensive
income (loss)
|
|
|
(445,266
|
)
|
|
(1,173,932
|
)
|
Net
Income (Loss)
Our
net
loss for the nine months ended September 30, 2008 was $355,790 as compared
to a
net loss of $1,088,379 for the nine months ended September 30, 2007. The net
loss during the period ended September 30, 2008 was due primarily to an increase
of $272,561 in interest expense resulting from increased borrowings, a decrease
of $83,212 in foreign exchange gain due to the increase in the currency exchange
rate between the Swiss franc and the US dollar and a decrease of $93,340 in
interest income due to decreased time deposits, offset by the $1,185,704 gain
generated from the sale of our Solar Plant.
Revenues
and Cost of Goods Sold
We
recognize revenue on the completed-contract method, and therefore, only when
projects are completed. During the period January 1 to September 30, 2008,
we
generated total revenue of $34,161 as compared to $1,255,275 for the nine months
ended September 30, 2007.
Cost
of
goods sold for the nine months ended September 30, 2008 was $3,092 compared
to
cost of goods sold of $1,039,496 for the nine months ended September 30,
2007.
As
noted
above, the decrease in revenue and corresponding decrease in cost of goods
sold
are attributable to management’s increased focus on completing our manufacturing
facility and producing our products on a large scale and away from smaller
custom installation projects.
Operating
Expenses
Operating
expenses for the nine months ended September 30, 2008 were $1,522,444 compared
to operating expenses of $1,557,000 for the nine months ended September 30,
2007. Personnel, rent, research and development, general and administrative,
and
depreciation and amortization expenses constitute the components of our
operating expenses. The slight decrease in operating expenses is attributable
to
an increase in personnel costs to develop the new activities of our subsidiary
(increase of $142,360), offset by a decrease in general and administrative
expenses associated with preparation and SEC compliance of various public
filings (decrease of $159,725). We expect that as we continue to implement
our
business plan these expenses will increase accordingly.
Other
Income (Expense)
Interest
expense increased to $322,520 for the nine months ended September 30, 2008
as
compared to $49,959 for the nine months ended September 30, 2007. The increase
in interest expense was primarily attributable to the increase in the amount
of
the loan from ScanE and from BCGE.
Interest
income for the nine months ended September 30, 2008 was $46,756 as compared
to
$140,096 for the period ended September 30, 2007. The interest income earned
during the period was received from time deposits.
Foreign
exchange gain for the nine months ended September 30, 2008 was $79,493 compared
to foreign exchange gain of $162,705 for the nine months ended September 30,
2007. Historical financial statements prior to September 27, 2006, the date
of
the reverse acquisition, are those of SES Switzerland, which conducts
substantially all its business and incurs substantially all its costs in Swiss
francs.
Net
Income (Loss) from Discontinued Operations, net of tax
Our
electricity producing segment was sold in June 2008. The Solar Plant, which
is
housed on the roof our manufacturing facility, had been operational since the
end of 2007, and from January 2008, generated revenue through the sale of
electricity. For the nine months ended September 30, 2008, revenue generated
from such sales totaled $247,730. The one time net gain generated by the sale
of
our Solar Plant was $1,185,704. This amount mostly covers research and
development costs of the Solar Plant that had been previously expensed. Due
to
the sale of the Solar Plant at the end of June 2008, no further revenue from
the
sale of electricity will be recognized in future periods
COMPARISON
OF TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(AUDITED)
|
|
Year
ended December 31
|
|
|
|
2007
|
|
2006
|
|
|
|
|
|
$
|
|
Total
revenues
|
|
|
1,344,794
|
|
|
129,275
|
|
Total
cost of goods sold (exclusive of depreciation shown separately
below)
|
|
|
(1,104,119
|
)
|
|
(95,333
|
)
|
Depreciation
and amortization
|
|
|
59,104
|
|
|
45,090
|
|
General
and administrative expenses
|
|
|
2,069,866
|
|
|
1,246,268
|
|
Interest
expense
|
|
|
(116,212
|
)
|
|
(56,757
|
)
|
Interest
Income and other
|
|
|
177,650
|
|
|
19,384
|
|
Foreign
exchange gain
|
|
|
302,803
|
|
|
55,281
|
|
Total
other income (expense)
|
|
|
364,241
|
|
|
17,908
|
|
Taxes
|
|
|
—
|
|
|
—
|
|
Net
(loss)/profit
|
|
|
(1,524,054
|
)
|
|
(1,239,507
|
)
|
Other
comprehensive income/loss: translation adjustment
|
|
|
(168,631
|
)
|
|
(309,709
|
)
|
Comprehensive
loss
|
|
|
(1,692,685
|
)
|
|
(1,549,216
|
)
|
Net
Loss
Our
net
loss for the year ended December 31, 2007 was $1,524,054 compared to a net
loss
of $1,239,507 for the year ended December 31, 2006. The increase in net loss
during the year ended December 31, 2007 was primarily due to personnel costs
to
develop the new activities of our subsidiary (from $184,710 to $366,553),
additional research expenses (from $151,246 to $426,814) and increased general
and administrative expenses (from $772,149 to $1,141,046).
Revenue
and Cost of Goods Sold
Total
revenue for the year ended December 31, 2007 was $1,344,794, which represents
an
increase of $1,215,519 compared with total revenue of $129,275 for the year
ended December 31, 2006. We recognize revenue on the completed-contract method,
and therefore when projects are completed. The increase in revenue is due to
3
projects completed during 2007.
Cost
of
goods sold for the year ended December 31, 2007 was $1,104,119, which represents
an increase of $1,008,786 as compared to cost of goods sold of $95,333 for
the
year ended December 31, 2006. The increase in cost of goods sold was primarily
attributable to the 3 projects completed during 2007. Cost of goods sold for
the
year ended December 31, 2007 was approximately 82% of total revenues compared
with approximately 74% of total revenues for the year ended December 31, 2006.
The increase in our cost of goods sold as a percentage of revenues was due
to a
decreased margin on revenues to obtain the contracts. Cost of goods sold is
also
highly dependent on quantities being purchased from suppliers.
Operating
Expenses
Operating
expenses for the year ended December 31, 2007 were $2,128,970, which represents
a 61% increase from $1,291,358 for the year ended December 31, 2006.
Personnel, rent, research and development, general and administrative, and
depreciation and amortization expenses constitute the components of our
operating expenses.
The
majority of the increase was related to personnel costs to develop the new
activities of our subsidiary (increase of $181,843), additional research and
development expenses (increase of $275,568), and increased general and
administrative expenses, including expenses associated with preparation and
SEC
compliance of various public filings (increase of $368,897).
We
expect
that as we continue to implement our business plan these expenses will increase
accordingly.
Other
Income (Expense)
Interest
expense increased to $116,212 for the year ended December 31, 2007 ($56,757
for
2006), representing an increase of approximately 105%. The increase in interest
expense was primarily attributable to the increase of the loan from ScanE.
On
March 22, 2006, the loan from ScanE was increased from CHF969,470 ($861,248)
to
CHF1,469,470 ($1,305,430). On August 28, 2007, we repaid ScanE $444,182 in
principal and $31,284 in interest.
Interest
income for the year ended December 31, 2007 was $177,650 as compared to $19,384
for the year ended December 31, 2006. The interest income earned in the year
ended December 31, 2007 was due to increased time deposits received during
the
second half of 2007.
Foreign
exchange gain for the year ended December 31, 2007 was $302,803 as compared
to
$55,281 for the year ended December 31, 2006.
Liquidity
and Capital Resources
Our
principal cash requirements are for operating expenses, including consulting,
accounting and legal costs, staff costs, and accounts payable.
As
of
September 30, 2008, we had working capital of $807,756 compared to $1,558,361
as
of September 30, 2007, and our cash and cash equivalents decreased to $1,256,972
as of September 30, 2008 compared to $3,526,273 as of September 30, 2007. This
decrease in working capital is the result partially of increased billings in
excess of cost and estimated earnings and accounts payable over the comparable
periods. The decrease in available cash and cash equivalents is attributable
to
repayment of short-term loans.
As
of
September 30, 2008, we had accounts payable of $1,073,840 compared to
$3,711,775
as
of
December 31, 2007. This large decrease is the result of amounts paid to
creditors for construction costs relating to our manufacturing facility. We
made
these payments utilizing loan proceeds received from BCGE and
ScanE.
At
September 30, 2008, we had short-term debt in the amount of $0 compared to
$6,147,728 as of December 31, 2007.
We
currently have several loans outstanding with ScanE. The first such loan in
the
amount of up to $911,810 was made on November 3, 2003 and carries a principal
balance of $883,972. The loan bears interest at 4%. Although the loan matured
on
March 31, 2008, we filed a request on April 2, 2008 with ScanE to renew the
loan
for a period of 24 months on the same terms and conditions. On May 19, 2008,
ScanE granted our request that the loan be extended for a period of 24 months
on
the same terms and conditions. The new maturity date for the loan is March
31,
2010.
On
January 21, 2004, we obtained a CHF1 million ($911,810) credit facility from
ScanE to finance the construction of our new manufacturing facility. Release
of
the loan proceeds was contingent upon our satisfying certain conditions
precedent, which we did as of November 13, 2007. As of January 8, 2008, we
had
utilized the full amount of this loan, which bears a fixed annual interest
rate
of 4%.
A
new six
month credit facility of CHF4,500,000 ($4,103,144) was signed on September
18,
2007 with ScanE. The loan bears interest at 5%. The proceeds were received
on
October 1, 2007 and were to be reimbursed on March 17, 2008. ScanE extended
the loan under the existing loan agreement until June 20, 2008. On June 20,
2008, we announced the sale of our Solar Plant on the roof of its manufacturing
facility. We received substantially all of the proceeds from this sale on
June 30, 2008 and used a portion of the proceeds to reimburse the CHF4,500,000
loan in full as of July 2, 2008.
SES
Switzerland also has a revolving credit line with UBS in the principal amount
of
CHF3,000,000 ($2,735,429) used mainly to cover short-term cash needs. The
revolving credit line was secured by short-term deposits denominated in US
dollars with UBS, amounting to $3,155,000. The credit line bears interest at
4.75%. On August 13, 2008, $3,000,000 of the short-term deposit was used to
offset the credit line. The balance of the credit facility was CHF0 ($0) as
of
September 30, 2008 and CHF1,450,764 ($1,288,815) as of December 31,
2007.
SES
Switzerland also has a Construction Credit Agreement with BCGE dated December
20, 2006 in the amount of $4,376,687 (CHF4.8 million), which is intended for
financing the construction of our new manufacturing facility. The loan was
amended on November 13, 2007 and increased from CHF4.8 million to CHF8.5 million
($7,750,383). The amended loan amount must be drawn down no later than the
date
of completion of the construction or December 11, 2008. We used $6,243,107
(CHF6,846,938) of this financing as of September 30, 2008, and $7,563 (CHF8,513)
as of December 31, 2007. The loan bears interest at a rate of 3.75% and is
secured by a second lien exclusive mortgage certificate of CHF9,000,000
($8,206,288) on the manufacturing facility.
Our
ability to meet our financial commitments in the near term will be primarily
dependent upon continued revenue from the sale of our manufactured solar panels
or modules, when available, and solar tiles and the related engineering services
required to design and install the same and the continued extension of credit
from existing or new lenders.
Management
believes that our cash and cash equivalents, cash provided by operating
activities, and cash available from existing loans will be sufficient to meet
our working capital requirements for the next twelve months. If our future
revenues do not increase significantly to a level sufficient to cover our net
losses, if any, we will continue to need to raise additional funds to expand
our
operations. In addition, we may need to raise additional funds sooner than
anticipated to respond to competitive pressures, to develop new or enhanced
products or services, to fund our expansion or to make acquisitions. We may
not
be able to find financing on acceptable terms or at all.
Operating
Activities
Net
cash
used in operating activities was $1,204,541 for the nine months ended September
30, 2008 compared to $647,357 of net cash used in operating activities for
the
nine months ended September 30, 2007. In local currency, use of funds for
operating activities was larger during this period compared to the same period
in 2007. However, exchange rate volatility has greatly offset the difference.
Billings in excess of cost and estimated earnings increased by $393,424 due
to
advances received for new projects. Additionally, inventory of our new PV
SwissTile® products increased by $1,182,401. Operating activities also include a
net gain of $1,185,704 from the sale of the Solar Plant.
Net
cash
used in operating activities was $1,320,685 for the year ended December 31,
2007, as compared to $1,781,847 of net cash used in operating activities for
the
year ended December 31, 2006.
The
net
cash provided from operating activities was mainly attributable to increased
billings in excess of cost and estimated earnings ($350,407) and deferred
expenses ($240,000) and negatively influenced by increased other current assets
of $393,932 and the increased net loss from $1,239,507 in 2007 to $1,524,054
in
2006. The net cash used in 2006 in operating activities was mainly attributable
to consultant fees, salaries, rents, and other general and administrative
expenses.
Investing
Activities
Net
cash
used in investing activities was $2,719,153 during the nine months ended
September 30, 2008 as compared to $2,286,677 used in investing activities during
the nine months ended September 30, 2007. The increase in investing
activities is mostly due to investments for the construction of our
manufacturing plant. Net cash is comprised of cash received from the sale of
the
Solar Plant for $5,065,460 and the use of cash to pay creditors for the
construction of the building and plant in the amount of $7,784,613.
Net
cash
used in investing activities was $5,630,316 during the year ended
December 31, 2007, as compared to ($17,443) provided in investing
activities during the year ended December 31, 2006. The increase in
investing activities was mostly due to investments for the construction of
the
manufacturing plant, Solar Plant and advances on machinery.
During
the remainder of 2008 and the first half of 2009, management anticipates total
capital expenditures of approximately $18 million for the new manufacturing
facility, of which we have already financed $10.5 million, and $3.5 million
for
the assembly line and related machinery. In addition, we may require during
the
next 12 months up to an additional $11 million to finance the purchase of raw
materials to be used in the production of 2 megawatts of solar
tiles.
Financing
Activities
Net
cash
provided by financing activities was $1,787,766 for the nine months ended
September 30, 2008 as compared to $543,067 for the nine months ended September
30, 2007.
The
increase in financing activities is due to bank loans granted to build the
new
plant from BCGE and ScanE. During 2008, the amount represents a net financing
between use of bank loans for $3,161,756 and the reimbursement of our line
of
credit with UBS for $1,373,990.
Net
cash
provided by financing activities was $4,554,347 for the year ended December
31,
2007, as compared to financing activities which provided cash of $8,011,229
for
the year ended December 31, 2006. The cash received in 2007 was mainly the
result of proceeds of loans used for current operating expenses and building
of
the solar plant. The cash received in 2006 was mostly due to proceeds from
the
issuance of common stock net of finder’s fees in the amount of $7,662,431 and a
new bank loan ($399,280), less a repayment of a loan of $50,482.
Off-Balance
Sheet Arrangements
We
have
no outstanding derivative financial instruments, interest rate swap transactions
or foreign currency contracts. We do not engage in trading activities involving
non-exchange traded contracts.
At
September 30, 2008, we had an outstanding purchase order of EUR448,600
($648,169), using the exchange rate of 0.6921 as of September 30,
2008, for the future construction of a new machine to be used in the new
manufacturing plant for solar modules production. We made an advance of
EUR269,160 ($388,901) for the purchase of this machine. The balance due will
be
paid upon delivery of the machine.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Our
directors hold office until the next annual meeting of stockholders or until
their successors have been elected and qualified. Our officers are appointed
by
our board of directors and hold office until their death, resignation or removal
from office.
As
of the
date of this prospectus, our directors and executive officers, their ages,
positions held, and duration of such, are as follows:
Name
|
|
Position with our Company
|
|
Age
|
|
Date First
Elected or Appointed
|
|
|
|
|
|
|
|
Jean-Christophe
Hadorn
|
|
Chief
Executive Officer and Director
|
|
53
|
|
September
27, 2006
|
|
|
|
|
|
|
|
Sandrine
Crisafulli
|
|
Chief
Financial Officer and
Chief
Operating Officer
|
|
50
|
|
September
27, 2006
|
|
|
|
|
|
|
|
Daniel
Erné
|
|
Director
|
|
53
|
|
September
27, 2006
|
|
|
|
|
|
|
|
Christiane
Erné
|
|
Director
|
|
55
|
|
September
27, 2006
|
|
|
|
|
|
|
|
Michael
D. Noonan
|
|
Director
|
|
50
|
|
September
27, 2006
|
Biographies
of our directors and executive officers are as follows:
Jean-Christophe
Hadorn
Mr.
Hadorn received his masters degree in Civil Engineering from the Swiss Federal
Institute of Technology in Lausanne in 1979 and his MBA from HEC University
of
Lausanne in 1998. From 1979 to 1981, Mr. Hadorn worked as a researcher at the
Institute for Energy Production (IPEN) within the Swiss Federal Institute of
Technology in Lausanne, Switzerland on large scale storage of solar heat in
deep
aquifers. From 1981 to 1985, Mr. Hadorn worked as a project engineer for SORANE
SA, a solar energy and engineering company in Switzerland, where he advised
architects and designed energy concepts for buildings and industry. Mr. Hadorn
worked from 1986 to 1995 as a project leader with BSI Engineering, a consulting
company in energy and information technology in Switzerland, on a geographical
information system software product for the design and management of energy
networks as principal developer of software, code named HyperBird. Since 1999,
Mr. Hadorn has worked as an independent energy consultant, and as the CEO of
BASE Consultants SA, Geneva, a strategy and management consulting company which
advises public and private businesses. Since 1985, Mr. Hadorn has been appointed
as a leader for national solar energy and heat storage research programs by
the
Swiss government and from 2003 to 2005 was asked by the French government to
set
up the National Institute of Solar Energy in France. Mr. Hadorn has participated
in several International Energy Agency (IEA) Tasks within the Solar Heating
and
Cooling Program (Task 7, Task 26, and Task 32 which he will lead as an Operating
Agent until 2007). Mr. Hadorn also serves as director of our wholly-owned
subsidiary, SES Switzerland.
Sandrine
Crisafulli
Ms.
Crisafulli has been our chief financial officer and chief operating officer
since 2001. Ms. Crisafulli received a certificate of commerce in commercial
studies from Lemania College in Lausanne, Switzerland. She has experience in
financial and administrative management having served as administrative director
and finance chief at N.E. Achille, a retail company, from 1995 until
2001.
Daniel
Erné
Mr.
Erné
has more than 25 years of experience in international trade having worked as
a
consultant for the Conseil Général of the Haute Savoie Department, France;
Breitling, a Swiss watch manufacturing company; BMS Automotives Ltd., a United
Kingdom design, engineering and turnkey supplier of automotive manufacturing
plants and a car import company; Casino Ruhl, a French casino; and several
hotel
groups. In addition, Mr. Erné manages several different private car, retail,
security and hotel companies in France and acts as a consultant to companies
engaged in international trading, including Securiguard since 2000. Mr. Erné’s
prior consulting engagements include Daniel.L (1980-1992), a restructuring
and
new market developments company and Delta Automobiles (1992-1999), a car
retailer and a solar car development company. Mr. Erné is married to Christiane
Erné.
Christiane
Erné
Ms.
Erné
worked in public relations and then as hotel director for Societe d’Exploitation
et Gestion Hoteliere from 1981 to 1984. Since 2001, Ms. Erné has been active in
the development of renewable energies and associated technologies through
Société d’Energie Solaire. Ms. Erné received a diploma in economics from the
University of Geneva in 1974. Ms. Erné is married to Daniel Erné.
Michael
D. Noonan
Mr.
Noonan has more than 15 years of investor relations, corporate finance and
corporate governance experience. Mr. Noonan has served since 2005 as the Vice
President, Corporate and a director of Sky Petroleum, Inc., an oil and gas
company quoted on the OTC Bulletin Board. He currently serves as its interim
CFO. Prior to joining Sky Petroleum, Mr. Noonan worked for Forgent Networks,
an
intellectual property and software company from 2002 to 2006, where he last
served as the Senior Director of Investor Relations. Prior to working at Forgent
Networks, Mr. Noonan was employed from 2000 to 2002 by Pierpont Communications,
an investor and public relations firm, where he was a Senior Vice President.
Mr.
Noonan also served from 1999 to 2000 as director of investor relations and
corporate communications at Integrated Electrical Services, an electrical
services company, and manager of investor relations and public affairs for
Sterling Chemicals from 1997 to 1999, a manufacturer of commodity chemicals.
Mr.
Noonan received an MBA from Athabasca University in Alberta, Canada in 1999;
a
Bachelor of Arts degree in Business Administration and Economics from Simon
Fraser University in British Columbia, Canada in 1986; and an Executive Juris
Doctorate from Concord School of Law in Los Angeles, California in
2006.
Committees
of the Board
All
proceedings of our board of directors are conducted by resolutions consented
to
in writing by all the directors and filed with the minutes of the proceedings
of
the directors. Such resolutions consented to in writing by the directors
entitled to vote on that resolution at a meeting of the directors are, according
to the corporate laws of the State of Delaware and the bylaws of our company,
as
valid and effective as if they had been passed at a meeting of the directors
duly called and held.
Our
company currently does not have nominating, compensation or audit committees
or
committees performing similar functions nor does our company have a written
nominating, compensation or audit committee charter. Our board of directors
does
not believe that it is necessary to have such committees because it believes
that the functions of such committees can be adequately performed by the board
of directors.
Our
company does not have any defined policy or procedure requirements for
stockholders to submit recommendations or nominations for directors. The board
of directors believes that given the early stage of our development a specific
nominating policy would be premature and of little assistance until our business
operations develop to a more advanced level. Our company does not currently
have
any specific or minimum criteria for the election of nominees to the board
of
directors and we do not have any specific process or procedure for evaluating
such nominees. The board of directors assesses all candidates, whether submitted
by management or stockholders, and makes recommendations for election or
appointment.
A
stockholder who wishes to communicate with our board of directors may do so
by
directing a written request addressed to our chief executive
officer.
Audit
Committee Financial Expert
Our
board
of directors has determined that we do not have a board member that qualifies
as
an “audit committee financial expert” as defined in Item 407(d) of Regulation
S-K.
We
believe that our board of directors is capable of analyzing and evaluating
our
financial statements and understanding internal controls and procedures for
financial reporting. Our board of directors does not believe that it is
necessary to have an audit committee because we believe that the functions
of an
audit committees can be adequately performed by our board of directors. In
addition, we believe that retaining an independent director who would qualify
as
an “audit committee financial expert” would be overly costly and burdensome and
is not warranted in our circumstances given the early stages of our
development.
Director
Independence
Our
board
of directors has determined that Michael D. Noonan is “independent” as such term
is defined by FINRA Rule 4200(a)(15).
Family
Relationships
Except
for Daniel Erné and Christiane Erné, who are husband and wife, there are no
family relationships between any of our directors, executive officers, or
persons nominated or chosen by us to become directors or executive
officers.
EXECUTIVE
COMPENSATION
The
following Summary Compensation Table sets forth certain information regarding
the compensation of our named executive officers for services rendered to us
for
the years ended December 31, 2007 and 2006.
Summary
Compensation Table
Name
and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
Jean-Christophe
Hadorn
(2)
|
|
|
2007
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
103,599
|
(1)
|
|
103,599
|
|
Chief
Executive Officer
|
|
|
2006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
95,827
|
(1)
|
|
95,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sandrine
Crisafulli
(2)
|
|
|
2007
|
|
|
108,450
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
108,450
|
|
Chief
Financial Officer and
Chief
Operating Officer
|
|
|
2006
|
|
|
25,957
|
|
|
|
|
|
|
|
|
|
|
|
25,957
|
|
(1)
|
We
have a one-year consulting agreement with Base Consulting pursuant
to
which Base Consulting provides us with strategic, managerial, marketing
and business development leadership. The services provided by Base
Consulting are performed by Mr. Hadorn, our chief executive officer.
Mr.
Hadorn contributes approximately 20 hours per week to our affairs.
Other
than pursuant to this consulting agreement, we do not compensate
Mr.
Hadorn in his capacity as chief executive
officer.
|
(2)
|
Ms.
Crisafulli and Base Consulting are paid in Swiss Francs. The dollar
figures for 2007 were calculated using the average exchange rate
of CHF
1.19870 for the fiscal year ended 2007. The dollar figures for 2006
were
calculated using the exchange rate of CHF 1.25225 for the fiscal
year
ended 2006.
|
Stock
Option Plan
We
do not
have a stock option plan in favor of any director, officer, consultant or
employee.
Stock
Options/Stock Awards
We
have
not granted any options or stock awards during our prior fiscal year, either
before or after the reverse merger.
Director
Compensation
Director
Compensation During Fiscal Year 2007
Name
|
|
Fees Earned
or
Paid in Cash
($)
|
|
All Other Compensation
($)
|
|
Total
($)
|
|
Jean-Christophe
Hadorn
|
|
|
8,342
|
|
|
0
|
|
|
8,342
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
Erné
|
|
|
108,450
|
|
|
0
|
|
|
108,450
|
|
We
did
not pay fees or other cash compensation for services rendered by our directors
during the fiscal year ended December 31, 2007 other than to Messrs. Hadorn
and
Erné. The amount paid to Mr. Hadorn was for services rendered in his capacity as
a director of SES Switzerland and is included in the $103,598 reported in the
Summary Compensation Table above. The amount paid to Mr. Erné was for services
rendered pursuant to a consulting agreement, as described below. We have no
current plans to compensate our directors in their capacities as such in the
future. We reimburse our directors for reasonable out-of-pocket expenses
incurred in connection with attending board meetings. The dollar figures for
2007 were calculated using the average exchange rate in effect for the fiscal
year 2007 (CHF 1.19870).
Employment
Agreements
SES
Switzerland entered into an employment agreement with Sandrine Crisafulli dated
September 14, 2006. Pursuant to the terms of the agreement, Ms. Crisafulli
receives an annual salary of $108,450. The term of the agreement is five (5)
years. If Ms. Crisafulli’s employment is terminated without cause, we are
obligated to pay her an amount equal to two years’ salary for each completed
three years of service.
SES
Switzerland entered into a consulting agreement with Daniel Erné dated October
3, 2006. Pursuant to this agreement, Mr. Erné assists with our day-to-day
managerial and operating activities, including serving as a consultant with
respect to financing opportunities, budgetary matters, and oversight of
construction on our new manufacturing facility. Mr. Erné contributes at least 40
hours per week to our affairs. Mr. Erné receives an annual salary of $108,450 in
consideration for these management consulting services. Mr. Erné is the husband
of Christiane Erné, a principal stockholder as well as a director of our company
and SES Switzerland.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth certain information regarding our common stock
beneficially owned as of the date of this prospectus for (i) each stockholder
we
know to be the beneficial owner of 5% or more of our outstanding common stock,
(ii) each of our executive officers and directors, and (iii) all executive
officers and directors as a group. In general, a person is deemed to be a
beneficial owner of a security if that person has or shares the power to vote
or
direct the voting of such security, or the power to dispose or to direct the
disposition of such security. A person is also deemed to be a beneficial owner
of any securities of which the person has the right to acquire beneficial
ownership within 60 days. As of the date of this prospectus, we had
approximately 73,081,168 shares of common stock issued and
outstanding.
Unless
otherwise indicated, the address for person listed below is c/o SES Solar Inc.,
129 Route de Saint-Julien, Plan-les-Ouates Geneva, Switzerland.
Name
and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
(1)
|
|
Percentage
of Class
(1)
|
|
|
|
|
|
|
|
Christiane
Erné
|
|
|
48,286,817
|
(2)
|
|
66.0
|
%
|
|
|
|
|
|
|
|
|
Jean-Christophe
Hadorn
|
|
|
2,414,341
|
(3)
|
|
3.30
|
%
|
|
|
|
|
|
|
|
|
Daniel
Erné
|
|
|
48,286,817
|
(4)
|
|
66.0
|
%
|
|
|
|
|
|
|
|
|
Michael
D. Noonan
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
Sandrine
Crisafulli
|
|
|
Nil
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
SG
Private Banking (Suisse) S.A.
Avenue
de Rumine 20
Case
Postale 220
Ch-1001
Lausanne, Switzerland
|
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
Directors
and Executive Officers as a Group (5 persons)
|
|
|
48,286,817
|
|
|
66.0
|
%
|
(1)
|
Based
on 73,081,168 shares of common stock issued and outstanding as of
the date
of this prospectus. Except as otherwise indicated, we believe that
the
owners of the common stock listed above have sole investment and
voting
power with respect to such shares, subject to community property
laws
where applicable. Beneficial ownership is determined in accordance
with
SEC rules and generally includes voting or investment power with
respect
to securities. Shares of common stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage ownership of
the
person holding such option or warrants, but are not deemed outstanding
for
purposes of computing the percentage ownership of any other
person.
|
(2)
|
Includes
4,828,682 shares of common stock, of which 2,414,341
were
transferred to each of Claudia Rey and Jean-Christophe Hadorn
pursuant
to a voting trust agreement entered into with Ms. Erné dated February 22,
2006. The terms of the voting trust agreement stipulate that Ms.
Rey and
Mr. Hadorn will vote their shares in accordance with Ms. Erné’s
instructions. Ms. Erné also has a right of preemption with respect to the
subject shares. As a result of her voting power over these shares,
Ms.
Erné may be deemed to beneficially own the 4,828,682 shares of common
stock transferred to each of Ms. Rey and Mr. Hadorn. Of the shares
beneficially owned by Ms. Erné, 10,000,000 are held in escrow as security
for repayment of a loan made by ScanE to SES Switzerland. See “Certain
Relationships and Related Party Transactions – Canton Geneva Escrow
Agreement.”
|
(3)
|
As
described in footnote (2), the shares held by Mr. Hadorn were transferred
to him by Ms. Erné pursuant to a voting trust agreement dated February 22,
2006.
|
(4)
|
Daniel
Erné is the husband of Christiane Erné and therefore may be deemed to
beneficially own the shares held by his wife. Mr. Erné expressly disclaims
ownership over these shares.
|
Changes
in Control
We
are
unaware of any contract or other arrangement or provision of our Articles or
Bylaws the operation of which may at a subsequent date result in a change of
control of our company.
CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS
Other
than as set forth below, there have been no material transactions, series of
similar transactions or currently proposed transactions during 2007, or
subsequent thereto, to which we or our wholly owned subsidiaries were or are
to
be a party, in which the amount involved exceeded the lesser of $120,000 or
one
percent of the average of our total assets at the year end for the last three
completed fiscal years and in which any director or executive officer or any
security holder who is known to us to own of record or beneficially more than
5%
of our common stock, or any member of the immediate family or sharing the
household (other than a tenant or employee) of any of the foregoing persons,
had
a direct or indirect material interest. We believe each of the following related
party transactions are on terms at least as favorable as would be available
from
unaffiliated parties.
On
August
31, 2006, we entered into an arm’s-length negotiated share exchange agreement
with SES Switzerland and the stockholders thereof, namely Christiane Erné,
Jean-Christophe Hadorn, and Claudia Rey, whereby we agreed to acquire SES
Switzerland. The closing of the transactions contemplated by the share exchange
agreement and the acquisition of all of the issued and outstanding common stock
of SES Switzerland occurred on September 27, 2006. In accordance with the terms
of the share exchange agreement, we issued
a
total
of 48,286,817
shares
of common stock to the former stockholders of SES Switzerland (Christiane Erné –
43,458,135 shares; Jean-Christophe Hadorn – 2,414,341 shares; Claudia Rey –
2,414,341 shares) in exchange for the acquisition by us of all 39,500 issued
and
outstanding common shares of SES Switzerland on the basis of 1,222.451 shares
of
our common stock for every one share of common stock of SES Switzerland. The
terms of the share exchange agreement also stipulated that we and the former
stockholders of SES Switzerland enter into the following escrow agreements:
(1)
the Canton Geneva Escrow Agreement; (2) the Credit Line Escrow Agreement; and
(3) the Long Term Escrow Agreement.
Canton
Geneva Escrow Agreement
In
connection with the closing of the share exchange agreement, we entered into
the
Canton Geneva Escrow Agreement dated September 15, 2006 with Christiane Erné,
Jean-Christophe Hadorn, Claudia Rey, and ScanE. Pursuant to the terms of the
Canton Geneva Escrow Agreement, the parties agreed to escrow 10,000,000 of
the
48,286,817 shares of common stock issued to Christiane Erné (9,000,000 shares),
Jean-Christophe Hadorn (500,000 shares) and Claudia Rey (500,000 shares) in
connection with the merger in order to secure partial repayment of a loan dated
November 3, 2003 by ScanE to SES Switzerland. See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Liquidity and
Capital Resources.” The 10,000,000 shares of common stock are to be delivered
from escrow as follows:
|
(a)
|
upon
repayment of the loan to ScanE:
|
(i)
if
within two years from the closing of the share exchange agreement, to the escrow
agent under the Long Term Escrow Agreement (as discussed below), or
(ii)
if
after two years from the closing of the share exchange agreement, to Christiane
Erné, Jean-Christophe Hadorn and Claudia Rey; or
|
(b)
|
upon
default of the loan, to ScanE.
|
As
of the
date of this prospectus, the loan, which matures March 31, 2010, remains
outstanding and the 10,000,000 shares remain in escrow.
Credit
Line Escrow Agreement
Also
in
connection with the closing of the share exchange agreement, we entered into
the
Credit Line Escrow Agreement dated September 1, 2006, as amended October 27,
2006 and November 30, 2006, with Christiane Erné, Jean-Christophe Hadorn, and
Claudia Rey. Pursuant to the terms of the Credit Line Escrow Agreement, the
parties agreed to escrow 24,143,410 of the 48,286,817 shares of common stock
issued in the merger to Christiane Erné (21,729,068 shares), Jean-Christophe
Hadorn (1,207,171 shares) and Claudia Rey (1,207,171 shares). The 24,143,410
shares of common stock are to be delivered from escrow as
follows:
|
(a)
|
into
a subsequent escrow in accordance with the terms of the Long Term
Escrow
Agreement (as described below) if our company receives financing
of at
least CHF12 million on or before November 30, 2007;
or
|
|
(b)
|
to
us for immediate cancellation if we do not receive financing of at
least
CHF 12 million on or before November 30,
2007.
|
On
September 18, 2007, we entered into a loan agreement with ScanE in the principal
amount of $3.9 million (CHF 4.5 million). On November 13, 2007, we entered
into
an amended agreement with BGCE whereby our Construction Credit Agreement dated
December 20, 2006 was increased from $4.1 million (CHF 4.8 million) to $7.6
million (CHF 8.5 million). As a result of these financings, and in combination
with our other available financing arrangements, we obtained financing in excess
of the amount required to satisfy the Credit Line Escrow Agreement and the
24,143,410 shares of common stock were transferred from the Credit Line Escrow
to the Long Term Escrow.
Long
Term Escrow Agreement
In
connection with the closing of the share exchange agreement, we also entered
into the Long Term Escrow Agreement dated September 1, 2006 with Christiane
Erné, Jean-Christophe Hadorn, and Claudia Rey. Pursuant to the terms of the Long
Term Escrow Agreement, we agreed to escrow all shares not otherwise escrowed
under either the Credit Line Escrow Agreement or the Canton Geneva Escrow
Agreement until September 27, 2008, the second anniversary of the closing of
the
share exchange agreement. As such, 38,286,817 of the shares of common stock
(which amount includes the 24,143,410 shares previously escrowed pursuant to
the
Credit Line Escrow Agreement) that were issued to Christiane Erné,
Jean-Christophe Hadorn, and Claudia Rey in the merger have been released from
escrow and returned to the respective stockholders.
Other
Related Transactions
SES
Switzerland entered into a consulting agreement with Flannel Management dated
October 1, 2006. Flannel Management receives a monthly consulting fee of
$16,685, calculated based on the exchange rate of CHF 1.19870 as in effect
on
December 31, 2007. The contract is for a guaranteed 10-year term and if earlier
terminated, we must pay the consulting fee for the full term. Flannel
Management’s consulting services are rendered by Philippe Crisafulli, the
husband of Sandrine Crisafulli, our chief operating officer and chief
financial officer. Pursuant to this agreement, Flannel Management, through
Mr.
Crisafulli, provides us with the research and development, production,
manufacturing and operational support necessary to bring our new manufacturing
facility and solar products into production. During the fiscal year ended
December 31, 2007, we paid $200,217 to Flannel Management.
On
December 20, 2006, SES Switzerland executed a construction loan with Christiane
Erné, one of our directors and our majority stockholder, to enable SES
Switzerland to commence construction of our new manufacturing facility in
Geneva, Switzerland. The loan was in the amount of $2,205,090, carried an
interest rate of 4.5% and had a two year term. The proceeds of the loan could
only be utilized once construction had commenced (July 2007). On November 13,
2007, we increased our Construction Credit Agreement with BCGE from CHF 4.8
million to CHF 8.5 million. As a result of this increase, the construction
loan
with Ms. Erné, which had never been utilized, was no longer required and the
parties mutually agreed to terminate the loan as of November 26, 2007.
In
June
2003, Ms. Erné contracted with us for the purchase and installation of solar
tiles on a private residence. This agreement was oral and there are no stated
payment terms other than that payment be received in full upon completion of
the
contract, which we do not expect to occur until the solar tiles manufactured
at
our new facility have been installed. The contract amount was approximately
$189,000 at the exchange rate of CHF 1.0 as of June 2, 2003. As of the fiscal
year ended 2007, we have recorded a receivable from a related party in the
amount of $84,938. The remaining balance is included under “Billings in excess
of cost and estimated earnings.”
SELLING
STOCKHOLDERS
This
prospectus relates to the resale from time to time of up to a total of
9,889,546
shares
of common stock by the selling stockholders.
The
following table sets forth certain information regarding the selling
stockholders and the shares offered by them in this prospectus. Each selling
stockholder’s percentage of ownership in the following table is based upon
73,081,168 shares of common stock outstanding as of
December
2,
2008.
Except
as
noted, none of the selling stockholders has held a position as an officer or
director of our company, nor has any selling stockholder had any material
relationship of any kind with us or any of our affiliates. Unless otherwise
specified in the footnotes to the table below, none of the selling stockholders
has any family relationships with our officers, directors or controlling
stockholders. To the Company’s knowledge, none of the selling stockholders is a
registered broker-dealer or an affiliate of a registered
broker-dealer.
Name
of Selling Stockholder
|
|
Common
Stock
Beneficially
Owned
Before
the
Offering
(1)
|
|
Shares
Offered
Hereby
|
|
Common
Stock
Beneficially
Owned
After the
Offering
(2)
|
|
Percentage
of
Shares
Beneficially
Owned
After
the
Offering
|
|
Kenneth
Sam
(3)
|
|
|
6,250
|
|
|
6,250
|
|
|
0
|
|
|
*
|
|
Kenneth
Silverman
(3)
|
|
|
31,250
|
|
|
31,250
|
|
|
0
|
|
|
*
|
|
Nite
Capital LP
(3)(7)
|
|
|
187,500
|
|
|
187,500
|
|
|
0
|
|
|
*
|
|
Evolution
Master Fund
(3)(8)
|
|
|
125,000
|
|
|
125,000
|
|
|
0
|
|
|
*
|
|
Bank
Julius Baer and Co. Ltd.
(4)(9)
|
|
|
187,600
|
|
|
187,600
|
|
|
0
|
|
|
*
|
|
SG
Private Banking (Suisse) S.A.
(4)(5)(10)
|
|
|
6,223,612
|
|
|
6,223,612
|
|
|
0
|
|
|
*
|
|
Frederick
H. Drury
(4)
|
|
|
15,625
|
|
|
15,625
|
|
|
0
|
|
|
*
|
|
Craig
Ivany
(4)
|
|
|
6,250
|
|
|
6,250
|
|
|
0
|
|
|
*
|
|
Judson
Rich
(4)
|
|
|
5,000
|
|
|
5,000
|
|
|
0
|
|
|
*
|
|
Merle
Lelievre-Parsons
(4)
|
|
|
60,000
|
|
|
60,000
|
|
|
0
|
|
|
*
|
|
Randall
Shaw
(4)
|
|
|
10,000
|
|
|
10,000
|
|
|
0
|
|
|
*
|
|
Charles
A. DePape
(4)
|
|
|
5,000
|
|
|
5,000
|
|
|
0
|
|
|
*
|
|
Lee
Yule Investments
(4)(11)
|
|
|
9,375
|
|
|
9,375
|
|
|
0
|
|
|
*
|
|
Neil
Cunningham
(4)
|
|
|
15,000
|
|
|
15,000
|
|
|
0
|
|
|
*
|
|
Tough
Equities Inc.
(4)(12)
|
|
|
6,250
|
|
|
6,250
|
|
|
0
|
|
|
*
|
|
Grazia
Bernard
(4)
|
|
|
80,000
|
|
|
80,000
|
|
|
0
|
|
|
*
|
|
Dorothy
Cameron
(4)
|
|
|
120,000
|
|
|
120,000
|
|
|
0
|
|
|
*
|
|
ADFI
Holding Limited
(4)(13)
|
|
|
375,000
|
|
|
375,000
|
|
|
0
|
|
|
*
|
|
Accelera
Private Equity II Limited
(4)(14)
|
|
|
87,500
|
|
|
87,500
|
|
|
0
|
|
|
*
|
|
Rodric
Marketing Inc.
(5)
|
|
|
277,778
|
|
|
277,778
|
|
|
0
|
|
|
*
|
|
SIF
Investment Company Ltd.
(5)(15)
|
|
|
555,556
|
|
|
555,556
|
|
|
0
|
|
|
*
|
|
Lansing
Securities Corp.
(5)(6)
|
|
|
1,500,000
|
|
|
1,500,000
|
|
|
0
|
|
|
*
|
|
Total
|
|
|
9,889,546
|
|
|
9,889,546
|
|
|
0
|
|
|
*
|
|
*
Less
than 1%
(1)
|
Beneficial
ownership is determined in accordance with SEC rules and generally
includes voting or investment power with respect to securities. Shares
of
common stock subject to options, warrants and convertible stock currently
exercisable or convertible, or exercisable or convertible within
sixty
(60) days, are counted as outstanding for computing the percentage
of the
person holding such options or warrants but are not counted as outstanding
for computing the percentage of any other
person.
|
(2)
|
Assumes
all of the shares of common stock offered hereby are sold. Based
on
73,081,168 common shares issued and outstanding as of
December
2,
2008.
|
(3)
|
The
selling security holders acquired their respective shares by way
of a
private placement completed on September 27, 2006. The shares were
issued
at an offering price of $0.80 per share for gross offering proceeds
of
$280,000. We issued the shares in reliance on Rule 506 of Regulation
D
and/or Section 4(2) or 4(6) of the Securities
Act.
|
(4)
|
The
selling security holders acquired their respective shares by way
of a
private placement completed on September 27, 2006. The shares were
issued
at an offering price of $0.80 per share for gross offering proceeds
of
$3,701,080 in offshore transactions pursuant to Rule 903 of Regulation
S
of the Securities Act. We are subject to Category 3 of Rule 903 of
Regulation S and, accordingly, we implemented the offering restrictions
required by Category 3 of Rule 903 of Regulation S by including a
legend
on all offering materials and documents which stated that the shares
have
not been registered under the Securities Act and may not be offered
or
sold in the United States or to U.S. persons unless the shares are
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is
available.
|
(5)
|
The
selling security holders acquired their respective shares by way
of a
private placement completed on November 22, 2006. The shares were
issued
at an offering price of $0.90 per share for gross offering proceeds
of
$3,690,000 in offshore transactions pursuant to Rule 903 of Regulation
S
of the Securities Act. We are subject to Category 3 of Rule 903 of
Regulation S and, accordingly, we implemented the offering restrictions
required by Category 3 of Rule 903 of Regulation S by including a
legend
on all offering materials and documents which stated that the shares
have
not been registered under the Securities Act and may not be offered
or
sold in the United States or to U.S. persons unless the shares are
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is
available.
|
(6)
|
Represents
shares of common stock issuable upon exercise of common share purchase
warrants issued to Lansing Securities as finder’s fees in connection with
the private placement on November 22, 2006. Each common share purchase
warrant is exercisable until November 22, 2010 at an exercise price
of
$0.90 per share. The natural persons having voting and/or dispositive
power over these shares are Jose E. Silva, Marta Diaz de Saavedra
and
Dianeth de Ospino.
|
(7)
|
The
natural person having voting and/or dispositive power over these
shares is
Mr. Keith Goodman.
|
(8)
|
Evolution
Capital Management, LLC, is the investment advisor to Evolution Master
Fund Ltd. SPC, Segregated Portfolio M. Mr. Michael Lerch, as Chief
Investment Officer of Evolution Capital Management, LLC, holds voting
and
investment discretion of the securities being
offered.
|
(9)
|
The
natural person having voting and/or dispositive power over these
shares is
Mr. U. Mettler.
|
(10)
|
The
natural person having voting and/or dispositive power over these
shares is
Mr. P. Davet Mandatory.
|
(11)
|
The
natural person having voting and/or dispositive power over these
shares is
Mr. Lee Yule.
|
(12)
|
The
natural person having voting and/or dispositive power over these
shares is
Mr. Barry Tough.
|
(13)
|
The
natural person having voting and/or dispositive power over these
shares is
Donat P. Marxer.
|
(14)
|
The
natural person having voting and/or dispositive power over these
shares is
Mr. Dennis Kam.
|
(15)
|
The
natural persons having voting and/or dispositive power over these
shares
are Messrs. N. Peter Ruys and Matthias
Jenzer.
|
PLAN
OF DISTRIBUTION
We
are
registering the shares of our common stock covered by this prospectus for the
selling stockholders. Each selling stockholder of the common stock and any
of
their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares of common stock through the OTC Bulletin Board
or any other stock exchange, market or trading facility on which the shares
are
traded or in private transactions. These sales may be at fixed or negotiated
prices. A selling stockholder may use any one or more of the following methods
when selling shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers,
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction,
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account,
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange,
|
|
·
|
privately
negotiated transactions,
|
|
·
|
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part,
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share,
|
|
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise,
|
|
·
|
a
combination of any such methods of sale,
or
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 of the Securities
Act, if available, rather than under this prospectus.
The
selling stockholders may also engage in short sales against the box, puts and
calls and other transactions in our securities or derivatives of our securities
and may sell or deliver shares in connection with these trades.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved. Any profits on the
resale of shares of common stock by a broker-dealer acting as principal might
be
deemed to be underwriting discounts or commissions under the Securities Act.
Discounts, concessions, commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by the selling stockholder.
The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving sales of the shares if liabilities
are imposed on that person under the Securities Act.
The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under
Rule 424(b) or other applicable provision of the Securities Act amending
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this
prospectus.
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b) or other
applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event,
any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We
are
required to pay all fees and expenses incident to the registration of the shares
of common stock, but we will not receive any proceeds from the sale of the
common stock by the selling stockholders. We have agreed to indemnify the
selling stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
We
have
not been advised by any selling stockholder that they have entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock or that there
is an underwriter or coordinating broker acting in connection with a proposed
sale of shares of common stock by any selling stockholder. If we are notified
by
any selling stockholder that any material arrangement has been entered into
with
a broker-dealer for the sale or purchase of shares of common stock, if required,
we will file a supplement to this prospectus. If the selling stockholders use
this prospectus for any sale of the shares of common stock, they will be subject
to the prospectus delivery requirements of the Securities Act.
We
have
advised each selling stockholder that it may not use shares registered under
this registration statement to cover short sales of common stock made prior
to
the date on which this registration statement shall have been declared effective
by the Securities and Exchange Commission. The selling stockholders will be
responsible for their respective compliance with the applicable provisions
of
the Securities Act and Exchange Act, and the rules and regulations thereunder
promulgated, including, without limitation, Regulation M, as applicable to
such selling stockholders in connection with resales of their respective shares
under this registration statement.
Transfer
of our common stock may be restricted under the securities laws promulgated
by
various states and foreign jurisdictions, commonly referred to as “blue sky”
laws. Absent compliance with individual state laws, our common stock may not
be
traded in such jurisdictions. Because the securities registered hereunder have
not been registered for resale under the blue sky laws of any state, the holders
of such shares and persons who desire to purchase them should be aware that
there may be significant state law restrictions upon the ability of investors
to
sell the securities and of purchasers to purchase them. Accordingly, investors
may not be able to liquidate their investments and should be prepared to hold
the common stock for an indefinite period of time.
As
a
public reporting company, we have the benefit of the “Exchange Act exemption,”
and we have received a listing in Standard and Poor’s Blue Sky Listing Program,
which provides us with exemptions in up to 44 states that have what is commonly
referred to as a “manual exemption” for secondary trading of securities such as
those to be resold by the selling stockholders named in this registration
statement. In these states, so long as we maintain our listing in Standard
and
Poor’s Blue Sky Listing Program, secondary trading of our common stock can occur
without any filing, review or approval by state regulatory authorities in these
states. These states include: Alaska, Arizona, Arkansas, Colorado, Connecticut,
District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine,
Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Jersey,
New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island,
South Carolina, Texas, Utah, Washington, West Virginia and Wyoming. We cannot
secure this listing, and thus this qualification, until after this registration
statement is declared effective. Secondary trading can occur in these states
without any further action.
We
do not
intend to qualify the securities being registered in this offering for resale
in
any other states which require shares to be qualified before they can be resold.
Selling stockholders may contact us to ascertain procedures necessary for
compliance with blue sky laws in the applicable states relating to sellers
and/or purchasers of our shares of common stock.
TRANSFER
AGENT AND REGISTRAR
The
transfer agent and registrar for our common stock is Interwest Transfer Company,
Inc., Suite 100 – 1981 East Murray Holladay Road, Salt Lake City, Utah
84117. Telephone: (801) 272-9294; facsimile: (801) 277-3147.
DESCRIPTION
OF COMMON STOCK
We
are
authorized to issue 100,000,000 shares of common stock with a par value
of
$0.001. As of
December
2,
2008, we
had 73,081,168 common shares issued and outstanding. Upon liquidation,
dissolution or winding up of the corporation, the holders of common stock
are
entitled to share ratably in all net assets available for distribution
to
stockholders after payment to creditors. The common stock is not convertible
or
redeemable and has no preemptive, subscription or conversion rights. There
are
no conversions, redemption, sinking fund or similar provisions regarding
the
common stock. Each outstanding share of common stock is entitled to one
vote on
all matters submitted to a vote of stockholders. There are no cumulative
voting
rights.
Each
stockholder is entitled to receive the dividends as may be declared by our
board
of directors out of funds legally available for dividends and, in the event
of
liquidation, to share pro rata in any distribution of our assets after payment
of liabilities. Our board of directors is not obligated to declare a dividend.
Any future dividends will be subject to the discretion of our board of directors
and will depend upon, among other things, future earnings, the operating and
financial condition of our company, its capital requirements, general business
conditions and other pertinent factors. We do not anticipate that dividends
will
be paid in the foreseeable future.
LEGAL
MATTERS
The
validity of the shares of common stock offered pursuant to this prospectus
have
been
passed
upon by Hogan & Hartson LLP.
EXPERTS
The
financial statements as of December 31, 2007 and 2006 and the related
consolidated statements of operations and comprehensive losses,
changes in stockholders
’
equity
(deficit) and cash flows for the period ended December 31, 2007 and
2006 included in this registration statement, of which this prospectus is a
part, have been audited by BDO Visura, an independent registered public
accounting firm, to the extent and for the periods set forth in their report
appearing elsewhere herein and are included in reliance upon such report given
upon the authority of said firm as experts in auditing and
accounting.
INDEX
TO CONSOLIDATED FINANCIAL INFORMATION
|
|
Page
|
INTERIM
FINANCIAL STATEMENTS
|
|
|
Consolidated
Balance Sheets as of September 30, 2008 (Unaudited)
|
|
F-1
|
Consolidated
Statements of Operations and Comprehensive Income (Loss) for the
Nine
Months Ended September 30, 2008 and 2007 (Unaudited)
|
|
F-3
|
Consolidated
Statements of Cash Flows for the Nine Months Ended September 30,
2008 and
2007 (Unaudited)
|
|
F-4
|
Notes
to Consolidated Financial Statements
|
|
F-5
|
|
|
|
ANNUAL
FINANCIAL STATEMENTS
|
|
|
Report
of Independent Registered Public Accounting Firm
|
|
F-14
|
Consolidated
Balance Sheets as of December 31, 2007 and 2006
|
|
|
Consolidated
Statements of Operations and Comprehensive Loss for the Years Ended
December 31, 2007 and 2006
|
|
|
Consolidated
Statements of Changes in Stockholders’ Equity (Deficit) for the Years
Ended December 31, 2007 and 2006
|
|
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2007 and
2006
|
|
|
Notes
to Consolidated Financial Statements
|
|
|
SES
SOLAR INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(in
$)
|
|
September 30,
|
|
December 31,
|
|
|
|
2008
|
|
2007
|
|
|
|
(unaudited)
|
|
|
|
ASSETS
(in $)
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
1,256,972
|
|
|
3,429,033
|
|
Receivables,
net of allowance for doubtful accounts of $0 for the periods ended
2008
and 2007
|
|
|
17,144
|
|
|
47,356
|
|
Due
from related party
|
|
|
87,179
|
|
|
84,938
|
|
Inventory
|
|
|
1,486,761
|
|
|
271,794
|
|
Other
current assets
|
|
|
356,789
|
|
|
639,763
|
|
Total
current assets
|
|
|
3,204,845
|
|
|
4,472,884
|
|
Long-Term
Assets:
|
|
|
|
|
|
|
|
Deferred
expense
|
|
|
0
|
|
|
180,000
|
|
Advance
payments for machinery
|
|
|
388,901
|
|
|
396,432
|
|
Total
other long-term assets
|
|
|
388,901
|
|
|
576,432
|
|
Property
and Equipment, at cost
|
|
|
451,344
|
|
|
437,493
|
|
Solar
Plant
|
|
|
0
|
|
|
3,785,521
|
|
Building
construction
|
|
|
10,294,462
|
|
|
5,398,153
|
|
Less
accumulated depreciation and amortization
|
|
|
(391,481
|
)
|
|
(339,014
|
)
|
Total
fixed assets
|
|
|
10,354,325
|
|
|
9,282,153
|
|
Total
long-term assets
|
|
|
10,743,226
|
|
|
9,858,585
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
13,948,071
|
|
|
14,331,469
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
Short-term
loan
|
|
|
0
|
|
|
6,147,728
|
|
Accounts
payable
|
|
|
1,073,840
|
|
|
3,711,775
|
|
Billings
in excess of cost and estimated earnings
|
|
|
1,323,249
|
|
|
507,044
|
|
Total
current liabilities
|
|
|
2,397,089
|
|
|
10,366,547
|
|
Long-Term
Liabilities:
|
|
|
|
|
|
|
|
Loan
payable
|
|
|
883,972
|
|
|
0
|
|
Construction
loan
|
|
|
7,154,917
|
|
|
7,563
|
|
Total
long-term liabilities
|
|
|
8,038,889
|
|
|
7,563
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value; 100,000,000 shares authorized; 100,000,000
shares
authorized;
73,081,168
shares issued and outstanding
|
|
|
73,081
|
|
|
73,081
|
|
Additional
paid-in capital
|
|
|
8,050,093
|
|
|
8,050,093
|
|
Accumulated
other comprehensive income (loss)
|
|
|
|
|
|
|
|
Translation
adjustment
|
|
|
(484,923
|
)
|
|
(395,447
|
)
|
Year
end accumulated deficit
|
|
|
(4,126,158
|
)
|
|
(3,770,368
|
)
|
Total
stockholders' equity (deficit)
|
|
|
3,512,093
|
|
|
3,957,359
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
|
13,948,071
|
|
|
14,331,469
|
|
See
accompanying summary of accounting policies and the notes to the financial
statements.
SES
SOLAR INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in
$)
|
|
For
the Nine Months
|
|
|
|
Ended
September 30,
|
|
|
|
2008
|
|
2007
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenue:
|
|
|
|
|
|
Revenue
|
|
|
34,161
|
|
|
1,255,275
|
|
Cost
of goods sold (exclusive of depreciation shown separately
below)
|
|
|
3,092
|
|
|
1,039,496
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses:
|
|
|
|
|
|
|
|
Personnel
|
|
|
405,957
|
|
|
263,597
|
|
|
|
|
|
|
|
|
|
Rent
and leases expenses
|
|
|
112,956
|
|
|
99,336
|
|
Research
& Development
|
|
|
279,539
|
|
|
322,174
|
|
Other
General & Administrative Expenses
|
|
|
673,163
|
|
|
832,888
|
|
Depreciation
and amortization
|
|
|
50,829
|
|
|
39,005
|
|
Total
costs and expenses
|
|
|
1,522,444
|
|
|
1,557,000
|
|
Other
Income and Expense:
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(322,520
|
)
|
|
(49,959
|
)
|
Interest
income
|
|
|
46,756
|
|
|
140,096
|
|
|
|
|
|
|
|
|
|
Foreign
exchange gain/(loss)
|
|
|
79,493
|
|
|
162,705
|
|
Total
other income (loss)
|
|
|
(196,271
|
)
|
|
252,842
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations before taxes
|
|
|
(1,687,646
|
)
|
|
(1,088,379
|
)
|
Income
taxes
|
|
|
0
|
|
|
0
|
|
Net
income (loss) from continuing operations
|
|
|
(1,687,646
|
)
|
|
(1,088,379
|
)
|
Income
(loss) from discontinued operations before taxes (Note 9)
|
|
|
1,331,856
|
|
|
0
|
|
Income
taxes
|
|
|
0
|
|
|
0
|
|
Net
income (loss) from discontinued operations
|
|
|
1,331,856
|
|
|
0
|
|
Net
income (loss)
|
|
|
(355,790
|
)
|
|
(1,088,379
|
)
|
Other
Comprehensive loss/income:
|
|
|
|
|
|
|
|
Translation
adjustment
|
|
|
(89,476
|
)
|
|
(85,553
|
)
|
Comprehensive
income (loss)
|
|
|
(445,266
|
)
|
|
(1,173,932
|
)
|
Basic
and diluted weighted average shares
|
|
|
73,081,168
|
|
|
50,002,908
|
|
Basic
and diluted net income (loss) per share from continuing
operations
|
|
|
(0.023
|
)
|
|
(0.022
|
)
|
Basic
and diluted net income (loss) per share from discontinuing
operations
|
|
|
0.018
|
|
|
0
|
|
Basic
and diluted net income (loss) per share
|
|
|
(0.005
|
)
|
|
(0.022
|
)
|
For
2007
amounts have been reclassified to reflect discontinued operations. There was
no
income or expense from discontinued operations.
See
accompanying summary of accounting policies and the notes to the financial
statements.
SES
SOLAR INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
$)
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
2007
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
Net
income (loss)
|
|
|
(355,790
|
)
|
|
(1,088,379
|
)
|
Adjustments
to reconcile net loss to cash used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
152,407
|
|
|
39,005
|
|
Gain
on sale of Solar Plant
|
|
|
(1,185,704
|
)
|
|
0
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
Receivables,
including Due from Related Party
|
|
|
32,678
|
|
|
(20,498
|
)
|
Inventory
|
|
|
(1,182,401
|
)
|
|
0
|
|
Other
current assets
|
|
|
311,550
|
|
|
(83,374
|
)
|
Deferred
Expenses
|
|
|
180,000
|
|
|
180,000
|
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
8,840
|
|
|
(114,566
|
)
|
Billings
in excess of cost and estimated earnings
|
|
|
833,879
|
|
|
440,455
|
|
Net
cash used in operating activities
|
|
|
(1,204,541
|
)
|
|
(647,357
|
)
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
|
|
|
|
|
Proceeds
on sale of Solar Plant
|
|
|
5,065,460
|
|
|
0
|
|
Property,
plant and equipment
|
|
|
(7,784,613
|
)
|
|
(1,916,939
|
)
|
Advance
payments for machinery
|
|
|
0
|
|
|
(369,738
|
)
|
Net
cash used in investing activities
|
|
|
(2,719,153
|
)
|
|
(2,286,677
|
)
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
|
|
|
Proceeds
from issuance of long-term debt
|
|
|
8,341,781
|
|
|
(417,035
|
)
|
Repayment
of long-term debt
|
|
|
(6,554,015
|
)
|
|
960,102
|
|
Net
cash provided by financing activities
|
|
|
1,787,766
|
|
|
543,067
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents
|
|
|
(2,135,928
|
)
|
|
(2,390,967
|
)
|
Effect
of exchange rate changes on cash
|
|
|
(36,133
|
)
|
|
(99,426
|
)
|
Cash
and cash equivalents, beginning of the quarter
|
|
|
3,429,033
|
|
|
6,016,666
|
|
Cash
and cash equivalents, end of the quarter
|
|
|
1,256,972
|
|
|
3,526,273
|
|
Supplemental
cash flow information
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
|
322,520
|
|
|
49,959
|
|
Supplemental
disclosure of non-cash operating and investing activities
|
|
|
|
|
|
|
|
Non
cash transaction, Property, plants and equipment in account
payable
|
|
|
748,924
|
|
|
0
|
|
See
accompanying summary of accounting policies and the notes to the financial
statements.
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
|
Organization
and Nature of Operations
|
Organization
- SES SOLAR INC. (the “Company,” “SES USA,” “our,” “we” and “us”) is the result
of a reverse acquisition accomplished on September 27, 2006 between SES USA,
a
Delaware company, which had no operations and net assets of $39,069, and Société
d’Energie Solaire SA (“SES Switzerland”), a Swiss company. SES USA acquired all
of the outstanding shares of SES Switzerland. For accounting purposes, the
acquisition has been treated as a recapitalization of SES Switzerland with
SES
Switzerland as the acquirer (reverse acquisition). SES Switzerland acquired
10,668,000 of SES USA in the transaction. The historical financial statements
prior to September 27, 2006 are those of SES Switzerland. The reverse
acquisition resulted in a change of control of SES USA, with the former
stockholders of SES Switzerland owning approximately 70% of SES USA and SES
Switzerland becoming SES USA’s wholly owned subsidiary.
SES
Switzerland was formed in 2001 for the purpose of researching, developing,
manufacturing and selling innovative products to the solar photovoltaic market.
From its inception, SES Switzerland has focused primarily on manufacturing
and
installing silicon photovoltaic solar cell panels. The principal source of
revenue for the Company has been the sale of photovoltaic panels in turn-key
installations, manufactured in-house or purchased from subcontractors, to
electric utilities, local government agencies and private
households.
As
of
July 31, 2008, the Company formed a new Swiss wholly owned subsidiary, SES
Prod
SA (“SES Prod”), also located in Geneva. It is expected that in the future, all
of the Company’s manufacturing activities now being conducted by SES Switzerland
will be conducted by SES Prod. At such time, SES Switzerland’s primary activity
will be managing the Company’s manufacturing facility.
SES
USA,
through its wholly owned operating subsidiary, SES Switzerland, has experienced
losses from operations and anticipates incurring operating losses in the near
future. SES Switzerland has, however, developed and patented a new assembly
technology for solar panels that allow higher quality electrical contacts,
better performance and reduced manufacturing costs resulting from increased
automation processes.
The
Company’s current business plan includes the development of a new assembly line
based on its proprietary technology and the construction of a manufacturing
facility in the suburbs of Geneva, Switzerland to produce solar modules and
solar tiles at a lower cost. These activities require the Company to design
and
manufacture prototype panels, have them approved in accordance with European
and
other standards, manufacture in series and sell them in the primary markets
for
solar photovoltaic cells. Costs incurred in manufacturing prototype panels
have
been expensed as research and development costs.
SES
USA
does not believe it can achieve profitability until development, implementation,
and commercialization of its new products manufactured through the new
assembling process are operational.
The
consolidated interim financial statements included herein are unaudited and
have
been prepared by the Company pursuant to the rules and regulations of the United
States Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States, or GAAP,
have been omitted pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the information presented
not
misleading. The consolidated interim financial statements include the accounts
of the Company and its wholly owned subsidiaries, SES Switzerland and SES Prod.
All significant inter-company accounts and transactions have been eliminated
in
consolidation.
These
statements reflect all normal recurring adjustments that, in the opinion of
management, are necessary for fair presentation of the information contained
herein. These consolidated interim financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
2007. The Company adheres to the same accounting policies in preparation of
its
interim financial statements. As permitted under GAAP, interim accounting for
certain expenses, including income taxes, are based on full year assumptions.
Such amounts are expensed in full in the year incurred. For interim financial
reporting purposes, income taxes are recorded based upon estimated annual income
tax rates.
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4.
|
Summary
of Significant Accounting
Policies
|
The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries, SES Switzerland and SES Prod. All significant
inter-company accounts and transactions have been eliminated in the
consolidation.
The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying disclosures. Although these
estimates are based on management’s knowledge of current events and actions that
the Company may undertake in the future, actual results may differ from such
estimates.
Foreign
Currency Translation
- The
reporting currency of SES USA is the U.S. dollar ($) whereas SES Switzerland’s
functional currency is the Swiss Franc (CHF). The financial statements of SES
Switzerland are translated to U.S. dollar equivalents under the current method
in accordance with SFAS No. 52, “Foreign Currency Translation.” Assets and
liabilities are translated into U.S. dollar equivalents at rates of exchange
in
effect at the balance sheet date. Average rates for the year are used to
translate revenues and expenses. The cumulative translation adjustment is
reported as a component of accumulated other comprehensive income (loss).
Foreign currency differences from inter-company receivables and payables are
recorded as Foreign Exchange Gains/Losses in the Statement of
Operations.
The
exchange rates used for translating the financial statements are listed
below:
|
|
2008
|
|
2007
|
|
|
|
CHF
|
|
CHF
|
|
$
|
|
|
1.05588
|
|
|
1.19894
|
|
|
|
2008
|
|
2007
|
|
Balance
Sheet period-end rates
|
|
CHF
|
|
CHF
|
|
$
|
|
|
1.09672
|
|
|
1.12566
|
|
Earnings
(Loss) Per Share
-
Earnings (Loss) per share is presented in accordance with the provisions of
SFAS
No. 128, “Earnings Per Share.” Basic and diluted loss per share for the
nine months ended September 30, 2007 does not include the effects of warrants
and is computed by dividing income available to common stockholders by the
weighted average number of shares of common stock outstanding for the period.
Diluted earnings per share reflects, in periods in which they have a dilutive
effect, commitments to issue common stock and common stock issuable upon
exercise of warrants for periods in which the warrants exercise price is lower
than the Company’s average share price for the period. The nine months ended
September 30, 2008 also does not include the effect of warrants outstanding
for
the period because their exercise price exceeded the average price for the
three
and nine months ended September 30, 2008.
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
2007
|
|
Basic
Weighted average shares outstanding
|
|
|
73,081,168
|
|
|
50,002,908
|
|
Diluted
weighted average shares outstanding
|
|
|
73,081,168
|
|
|
50,002,908
|
|
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note
:
Due
to
the net loss, the calculation of the effect of common stock equivalents due
to
issuance of warrants is excluded because of anti-dilution. The number of shares
of common stock listed as beneficially owned by one stockholder includes
1,500,000 shares of common stock potentially issuable upon exercise of 1,500,000
common share purchase warrants. Each common share purchase warrant is
exercisable until November 22, 2010 at an exercise price of $0.90 per share.
As
of the September 30, 2008 and December 31, 2007 balance sheet dates, the
warrants were not yet exercised. Also, they are not included in the computation
of diluted loss per share because their effect was anti-dilutive.
Revenue
Recognition
- The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
No.
104, "Revenue Recognition" ("SAB 104"). SAB 104 requires that four basic
criteria be met before revenue can be recognized: (1) persuasive evidence of
an
arrangement exists; (2) delivery has occurred or services rendered; (3) the
seller's price to the buyer is fixed and determinable; and (4) collection is
reasonably assured.
Revenues
and profits from general management of construction-type contracts are
recognized on the completed-contract method and therefore when the project
is
completed. A contract is considered complete when all costs except insignificant
items have been incurred and the installation is operating according to
specifications or has been accepted by the customer. Contract costs include
all
direct materials and labor costs and those indirect costs related to contract
performance, such as indirect labor, supplies, tools, repairs and depreciation
costs. Costs in excess of amounts billed are classified as current assets under
Work in Progress. Billings in excess of cost are classified under current
liabilities as Billings in Excess of Cost and Estimated Earnings. Any
anticipated losses on contracts are charged to operations as soon as they are
determinable. No unbilled revenue has been recognized so far.
For
the
nine months ended September 30, 2008 and 2007, the Company has no billed or
unbilled amount representing claims or other similar items subject to
uncertainty concerning their determination or ultimate realization.
Between
January 2008 and June 2008, the Company recognized sales of photovoltaic
electricity produced by solar modules on the roof of its new manufacturing
facility to a local electricity provider in Geneva. Revenues from such sales
were recognized monthly based on the amount of electricity produced. As further
explained below, such revenue has ceased due to the sale of the power plant
as
of June 30, 2008.
Impact
of Recently Issued Accounting Pronouncements
In
December 2007, the FASB issued SFAS No. 141(R),
“
Business
Combinations.” SFAS 141(R) requires all business combinations completed
after the effective date to be accounted for by applying the acquisition method
(previously referred to as the purchase method). Companies applying this method
will have to identify the acquirer, determine the acquisition date and purchase
price and recognize at their acquisition-date fair values the identifiable
assets acquired, liabilities assumed, and any noncontrolling interests in the
acquiree. In the case of a bargain purchase the acquirer is required to
reevaluate the measurements of the recognized assets and liabilities at the
acquisition date and recognize a gain on that date if an excess remains.
SFAS 141(R) becomes effective for fiscal periods beginning after
December 15, 2008. The Company is currently evaluating the impact of
SFAS 141(R).
In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
No. 157, “Fair Value Measurements” (SFAS No. 157).
SFAS No. 157 defines fair value for financial accounting and reporting
purposes, establishes a framework for measuring fair value and expands
disclosures about fair value measurements but does not change the requirements
to apply fair value in existing accounting standards. Under SFAS No. 157,
fair value refers to the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants
in
the principal or, in the absence of a principal, the most advantageous market.
The standard clarifies that fair value should be based on the assumptions market
participants would use when pricing the applicable asset or
liability.
SFAS
No. 157 was effective and adopted by the Company as of January 1,
2008. The provisions of SFAS No. 157 are being applied prospectively. The
adoption of SFAS No. 157 did not have a material impact on the Company’
results of operations, cash flows or financial positions. See Note 17 — Fair
Value of Financial Assets and Liabilities for additional information regarding
the adoption of SFAS No. 157.
In
February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-2, “Effective
Date of FASB Statement No. 157” (FSP FAS 157-2), which delays the effective
date of SFAS No. 157 for all nonrecurring fair value measurements of
nonfinancial assets and liabilities until fiscal years beginning after
November 15, 2008. The Company has elected to defer the adoption of the
nonrecurring fair value measurement disclosures of nonfinancial assets and
liabilities. The adoption of FSP FAS 157-2 is not expected to have a material
impact on the Company’s results of operations, cash flows or financial
positions.
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In
February 2007, the FASB issued SFAS No. 159,
“
The
Fair
Value Option for Financial Assets and Liabilities - including an amendment
to
FASB Statement No. 115” (SFAS No. 159). This statement permits
entities to choose to measure many financial instruments and certain other
items
at fair value in order to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently. SFAS No. 159 is
effective for the Company’s fiscal year beginning January 1, 2008. The
Company has not adopted the fair value option for its current financial assets
or liabilities. Accordingly, the adoption of SFAS No. 159 did not have an
impact on its consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (SFAS No. 160). SFAS No. 160
clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS No. 160 requires that changes in a
parent's ownership interest in a subsidiary be reported as an equity transaction
in the consolidated financial statements when it does not result in a change
in
control of the subsidiary. When a change in a parent's ownership interest
results in deconsolidation, a gain or loss should be recognized in the
consolidated financial statements. SFAS No. 160 must be applied
prospectively as of January 1, 2009, except for the presentation and
disclosure requirements, which are required to be applied retrospectively for
all periods presented. The adoption of SFAS No. 160 will not have a
material impact on the Company’s results of operations, cash flows or financial
positions; however, it could impact future transactions entered into by the
Company.
In
March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS No. 161). SFAS No. 161 amends and expands the disclosure
requirements of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (SFAS No. 133), by requiring enhanced disclosures about
how and why an entity uses derivative instruments, how derivative instruments
and related hedged items are accounted for under SFAS No. 133 and its
related interpretations, and how derivative instruments and related hedged
items
affect an entity's financial position, financial performance, and cash flows.
SFAS No. 161 requires qualitative disclosures about objectives and
strategies for using derivatives, quantitative disclosures about fair value
amounts of and gains and losses on derivative instruments, and disclosures
about
credit-risk-related contingent features in derivative agreements. SFAS
No. 161 will be effective for the Company as of January 1, 2009. As
SFAS No. 161 provides only disclosure requirements, the adoption of this
standard will not have a material impact on the Company’s results of operations,
cash flows or financial positions.
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Inventory
is summarized as follows:
|
|
Nine
Months
Ended
|
|
Twelve
Months
Ended
|
|
|
|
September
30,
2008
|
|
December
31, 2007
|
|
|
|
$
|
|
$
|
|
Raw
Materials and Others
|
|
|
1,301,803
|
|
|
97,159
|
|
Finished
Goods
|
|
|
184,958
|
|
|
174,635
|
|
Total
Inventory
|
|
|
1,486,761
|
|
|
271,794
|
|
6.
|
Borrowings
Under Revolving Credit Facility, Short and Long-Term
Loans
|
|
|
Nine
Months
Ended
|
|
Twelve
Months
Ended
|
|
Short-Term Loan
|
|
September
30,
2008
|
|
December
31, 2007
|
|
|
|
$
|
|
$
|
|
Geneva
(Switzerland) State Department of Energy
|
|
|
0
|
|
|
861,248
|
|
Geneva
(Switzerland) State Department of Energy
|
|
|
0
|
|
|
3,997,665
|
|
UBS
|
|
|
0
|
|
|
1,288,815
|
|
|
|
|
0
|
|
|
6,147,728
|
|
|
|
Nine
Months
Ended
|
|
Twelve
Months
Ended
|
|
Long-Term Loan
|
|
September
30,
2008
|
|
December
31, 2007
|
|
|
|
$
|
|
$
|
|
Banque
Cantonale de Genève
|
|
|
6,243,107
|
|
|
7,563
|
|
Geneva
(Switzerland) State Department of Energy
|
|
|
1,795,782
|
|
|
0
|
|
|
|
|
8,038,889
|
|
|
7,563
|
|
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On
November 6, 2003, SES Switzerland received a loan from the Geneva (Switzerland)
State Department of Energy (“ScanE”) of up to CHF1,000,000 ($911,810). The loan
bears interest at a rate of 4%. SES Switzerland used CHF969,470 ($883,972)
of
this loan as of September 30, 2008, and CHF969,470 ($861,248) as of December
31,
2007. This loan matured on March 31, 2008. On April 2, 2008, the Company filed
a
request with ScanE to renew the loan for a period of 24 months on the same
terms
and conditions. By decision dated May 19, 2008, ScanE accepted the Company’s
request that the loan be extended for a period of 24 months on the same terms
and conditions. The new maturity date for the loan is March 31, 2010. Pursuant
to the Canton Geneva Escrow Agreement dated September 15, 2006, Christiane
Ernè,
Jean-Christophe Hadorn and Claudia Rey personally pledged 10,000,000 of their
issued SES USA common shares as a guarantee for the original loan entered into
on November 6, 2003. These shares now serve as a guarantee for the renewed
loan
dated May 19, 2008. The Company does not currently have any plans to repay
the
loan before its March 31, 2010 maturity date.
On
January 21, 2004, ScanE granted the Company a credit facility of CHF1million
($911,810) to finance the construction of the Company’s new manufacturing
facility. Release of these loan proceeds was contingent upon the Company
satisfying certain conditions precedent, which were satisfied as of November
13,
2007. As of January 8, 2008, we had utilized the full amount of the loan, which
has a fixed annual interest rate of 4%. The loan has a duration of 20 years
and
is secured by a mortgage certificate of CHF1,000,000 ($911,810) on the
manufacturing facility. The loan will be reimbursed in 20-equal annual
installments of CHF73,581 (approximately $69,688).
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On
September 18, 2007, we signed a six month credit facility for CHF4,500,000
($4,103,144) with ScanE. The loan bears interest at 5%. The proceeds were
received on October 1, 2007 and became due on March 17, 2008. ScanE extended
the
loan until June 20, 2008 under the same terms and conditions as the existing
loan agreement. On June 20, 2008, SES announced the sale of its photovoltaic
power station to Services Industriels de Geneve (“SIG”). The Company
received substantially all of the proceeds from the sale on June 30, 2008 and
used a portion of the proceeds to reimburse this loan in full as of July 2,
2008.
SES
Switzerland also had a revolving credit line with UBS in the principal amount
of
CHF3,000,000 ($2,735,429) used mainly to cover short-term cash needs. The
revolving credit line was secured by short-term deposits denominated in US
dollars with UBS, amounting to $3,155,000. The credit line bears interest at
4.75%. On August 13, 2008, $ 3,000,000 of the short-term deposit were used
to
offset the credit line. The balance of the credit facility was CHF0 ($0) as
of
September 30, 2008 and CHF1,450,764 ($1,288,815) as of December 31,
2007.
SES
Switzerland also has a Construction Credit Agreement with Banque Cantonale
de
Genève (BCGE) dated December 20, 2006 in the amount of CHF4.8 million
($4,376,687), which is used to finance construction of our new manufacturing
facility. The loan was amended on November 13, 2007 and increased from CHF4.8
million to CHF8.5 million ($7,750,383). The amended agreement must be drawn
down
no later than the date of completion of construction on the new manufacturing
facility or December 11, 2008. We used CHF6,846,938 ($6,243,107) of the loan
as
of September 30, 2008 and CHF8,513 ($7,563) as of December 31, 2007. The loan
bears interest at a rate of 3.75% and is secured by a second lien exclusive
mortgage certificate of CHF9,000,000 ($8,206,288) on the manufacturing
facility.
7.
|
Commitments
and Contingencies
|
Operating
Leases
-
Lease expenses for the nine months ended September 30, 2008 and 2007 were
$112,956 and $99,336, respectively.
The
following table presents future minimum lease commitments (concerning the lease
of a vehicle) under operating leases at September 30, 2008:
|
|
Operating
Leases
|
|
|
|
$
|
|
2008
|
|
|
4,239
|
|
2009
|
|
|
14,192
|
|
Thereafter
|
|
|
—
|
|
Total
|
|
|
18,431
|
|
In
addition to the amounts disclosed above, SES Switzerland has an operating lease
for its office located at 129 Route de Saint-Julien, Plan-les-Ouates,
Switzerland (a suburb of Geneva). The rent is CHF52,572 ($49,790) per year.
The
initial lease term ended on February 28, 2008. The lease has been renewed with
the same conditions for the next 12 months.
SES
Switzerland also leases a 1,654 square meter industrial facility in Härkingen,
Switzerland. The monthly fixed rent is CHF7,232 (approximately $6,849). The
lease has no specific termination date. The lease may be cancelled with six
months notice at the end of the month, except for December, which requires
an
additional month’s notice.
On
May
27, 2005, we received authorization from the State of Geneva to build a
manufacturing facility on their property in Plan-les-Ouates, Switzerland and
we
received a lease for the land in February 2007. The lease for use of the land
is
for 60 years commencing on July 1, 2006.
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The
following are the lease commitments:
|
|
Use of Land
|
|
|
|
$
|
|
2008
|
|
|
17,063
|
|
2009
|
|
|
68,252
|
|
2010
|
|
|
68,252
|
|
2011
|
|
|
68,252
|
|
2012
|
|
|
68,252
|
|
Thereafter
|
|
|
3,651,456
|
|
Total
|
|
|
3,941,527
|
|
SES
Switzerland has no non-cancellable operating leases.
Litigation
- The
Company is from time to time subject to routine litigation incidental to its
business. There is no such litigation currently pending.
Capital
Commitments
- At
September 30, 2008, the Company has an outstanding purchase order of EUR448,600
($648,169) for the future construction of a new machine to be used in the new
plant for solar module production. The Company has made an advance
payment of EUR269,160 ($388,901) for the purchase of this machine. The
balance due will be paid upon delivery of the machine. At September 30, 2008,
the Company signed purchase agreements for the building of the new plant for
CHF6,979,077($6,363,591). An advance payment of CHF3,138,500($2,861,715) was
made on October 1, 2008, the remaining amount will be paid at the end of the
construction planned before year end.
As
December 31, 2007, all of the Company’s operations were conducted through its
wholly owned subsidiary, SES Switzerland, and were limited to the assembly
and
installation of photovoltaic panels in Switzerland. Commencing January 2008,
the
Company began selling electricity produced by its photovoltaic power station
(the “Solar Plant”) on the roof of its new manufacturing facility to a local
utility in Geneva. As previously reported, the Solar Plant was sold in June
2008. As a result, the Company’s operations are again limited to the assembly
and installation of photovoltaic panels.
9.
|
Discontinued
Operations
|
As
noted
above, the Company sold its Solar Plant in June 2008. The balance sheet and
income statement have been retrospectively adjusted to reflect the effects
of
discontinued operations. The Company sold photovoltaic electricity produced
by
the Solar Plant to a local electricity provider in Geneva based on a 20-year
contract. This contract was cancelled on June 30, 2008 due to the sale of the
Solar Plant. The net income from discontinued operations is from the former
electricity producing business segment. The Solar Plant and the six-month credit
facility of CHF4.5 million dated September 18, 2007 are the sole assets and
liabilities, respectively, that comprise the electricity producing business
segment.
The
net
income from discontinued operations during the nine-month period ended September
30, 2008 was $1,331,856 (gain on disposal of $1,185,704, revenue of $247,730
and
expenses of $101,578). No income was recorded for the three-month period ended
September 30, 2008. In 2007 there was no income or expense from discontinued
operations.
|
|
Nine months ended September 30, 2008
|
|
|
|
|
|
|
Revenue
|
|
|
247,730
|
|
Operating
expenses
|
|
|
(101,578
|
)
|
Gain
(loss) on sale
|
|
|
1,185,704
|
|
Income
tax (expense) recovery
|
|
|
-
|
|
Net
earnings (loss) from discontinued operations
|
|
|
1,331,856
|
|
Common
Stock
- The
Company has 100,000,000 shares of common stock authorized, par value $0.001
per
share, and 73,081,168 shares issued and outstanding.
During
the nine-month period ended September 30, 2008, no stock purchase warrants
were
exercised.
SES
SOLAR INC. AND SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Warrant
transactions consisted of the following during the quarter ended September
30,
2008.
|
|
Exercisable
Warrants
|
|
Strike
Price ($)
|
|
Warrants outstanding
as of December 31, 2007
|
|
|
1,500,000
|
|
$
|
0.90
|
|
Exercise
of warrants
|
|
|
0
|
|
|
0
|
|
Warrants
outstanding as of September 30, 2008
|
|
|
1,500,000
|
|
$
|
0.90
|
|
Warrants
outstanding expire as follows:
Year
|
|
Warrants
Expiring
|
|
Strike
Price ($)
|
|
2010
|
|
|
1,500,000
|
|
|
0.90
|
|
|
|
|
1,500,000
|
|
|
|
|
The
Company granted registration rights to Lansing Securities including the right
to
include all or any part of the Warrant Shares (the “Registrable Securities”) in
the next registration statement and subsequent registration statements that
the
Company files with the SEC from time to time (the “Registration Statement”)
(other than a registration statement on Form S-8 or Form S-4) until all of
the
Registrable Securities have been duly registered.
On
August
31, 2006, SES USA entered into an agreement with Standard Atlantic to advise
SES
USA and its stockholders in connection with the purchase of all of the shares
of
SES Switzerland. Pursuant to the terms of a Finder’s Agreement between SES USA
and Standard Financial (the “Finder’s Agreement”) the parties agreed to a
finder’s fee of $228,000 if a transaction were consummated. The Finder’s
Agreement also provided that Standard Atlantic would continue to provide
consulting services to the Company for a period of 24 months regarding investor
relations matters for a monthly fee of $20,000. The two-year consulting fee
was
due and was paid to Standard Financial at closing. The Company paid and recorded
initially the total amount as deferred expense and amortized the amount over
the
24 months of the consulting agreement, which ended on September
2008.
Other
than as disclosed herein, no major events have occurred since September 30,
2008.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
of
Directors and Stockholders
SES
Solar
Inc.
We
have
audited the accompanying consolidated balance sheets of SES Solar Inc. (the
"Company") as of December 31, 2007 and 2006 and the related consolidated
statements of operations and comprehensive losses, changes in stockholders'
equity (deficit) and cash flows for each of the two years in the period ended
December 31, 2007. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statement, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In
our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of SES Solar Inc. at December
31, 2007 and 2006, and the results of its operations and its cash flows for
each
of the two years in the periods ended December 31, 2007, in conformity with
accounting principles generally accepted in the United States of
America.
Zurich,
March 26, 2008
BDO
Visura
/s/
Andreas Wyss
|
|
/s/
Christian Feller
|
Andreas
Wyss
Auditor
in Charge
|
|
Christian
Feller
|
|
|
|
Swiss
Certified Accountant / CPA
|
|
Swiss
Certified Accountant
|
SES
SOLAR INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEET
(in
$, except per share amounts)
|
|
|
|
December 31st
2007
|
|
December 31st
2006
|
|
ASSETS
(in $)
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
6
|
|
|
3,429,033
|
|
|
6,016,666
|
|
Receivables,
net of allowance for doubtful accounts of $ 0 for the years ended
2007 and
2006.
|
|
|
7
|
|
|
47,356
|
|
|
10,386
|
|
Due
from related party
|
|
|
20
|
|
|
84,938
|
|
|
78,386
|
|
Inventory
|
|
|
8
|
|
|
271,794
|
|
|
237,275
|
|
Other
current assets
|
|
|
|
|
|
639,763
|
|
|
203,280
|
|
Total
current assets
|
|
|
|
|
|
4,472,884
|
|
|
6,545,993
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Assets:
|
|
|
|
|
|
|
|
|
|
|
Deferred
Expense
|
|
|
14
|
|
|
180,000
|
|
|
420,000
|
|
Advance
payments for machinery
|
|
|
|
|
|
396,432
|
|
|
0
|
|
Total
other long-term assets
|
|
|
|
|
|
576,432
|
|
|
420,000
|
|
Property
and Equipment, at cost,
|
|
|
|
|
|
437,493
|
|
|
376,837
|
|
Solar
plant
|
|
|
|
|
|
3,785,521
|
|
|
0
|
|
Building
construction
|
|
|
|
|
|
5,398,153
|
|
|
219,619
|
|
Less
accumulated depreciation and amortization
|
|
|
|
|
|
(339,014
|
)
|
|
(254,779
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
fixed assets
|
|
|
9
|
|
|
9,282,153
|
|
|
341,677
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
long-term assets
|
|
|
|
|
|
9,858,585
|
|
|
761,677
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
|
|
|
14,331,469
|
|
|
7,307,670
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Short-term
loan
|
|
|
10
|
|
|
6,147,728
|
|
|
409,920
|
|
Accounts
payable
|
|
|
|
|
|
3,711,775
|
|
|
329,323
|
|
Billings
in excess of cost and estimated earnings
|
|
|
11
|
|
|
507,044
|
|
|
123,573
|
|
Total
current liabilities
|
|
|
|
|
|
10,366,547
|
|
|
862,816
|
|
Long-Term
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Loan
payable
|
|
|
10
|
|
|
0
|
|
|
794,810
|
|
Construction
loan
|
|
|
10
|
|
|
7,563
|
|
|
0
|
|
Total
long-term liabilities
|
|
|
|
|
|
7,563
|
|
|
794,810
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity:
|
|
|
14
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value;
|
|
|
|
|
|
73,081
|
|
|
73,081
|
|
100,000,000
shares authorized;
|
|
|
|
|
|
|
|
|
|
|
73,081,168
shares issued and outstanding;
|
|
|
|
|
|
|
|
|
|
|
Additional
paid in Capital
|
|
|
|
|
|
8,050,093
|
|
|
8,050,093
|
|
Accumulated
other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
Translation
Adjustment
|
|
|
|
|
|
(395,447
|
)
|
|
(226,816
|
)
|
Year
end Accumulated Deficit
|
|
|
|
|
|
(3,770,368
|
)
|
|
(2,246,314
|
)
|
Total
stockholders’ equity (deficit)
|
|
|
|
|
|
3,957,359
|
|
|
5,650,044
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
14,331,469
|
|
|
7,307,670
|
|
See
accompanying summary of accounting policies and the notes to the financial
statements.
SES
SOLAR INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in
$, except per share amounts)
|
|
|
|
Year Ended
December 31,
2007
|
|
Year Ended
December 31,
2006
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
5,
7
|
|
|
1,344,794
|
|
|
129,275
|
|
Cost
of goods sold (exclusive of depreciation shown separately
below)
|
|
|
|
|
|
(1,104,119
|
)
|
|
(95,333
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses:
|
|
|
|
|
|
|
|
|
|
|
Personnel
|
|
|
|
|
|
366,553
|
|
|
184,710
|
|
Rent
and Leases Expenses
|
|
|
12
|
|
|
135,453
|
|
|
138,163
|
|
Research
and Development
|
|
|
|
|
|
426,814
|
|
|
151,246
|
|
Other
G+A
|
|
|
|
|
|
1,141’046
|
|
|
772,149
|
|
Depreciation
and amortization
|
|
|
|
|
|
59,104
|
|
|
45,090
|
|
Total
costs and expenses
|
|
|
|
|
|
2,128,970
|
|
|
1,291,358
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income and Expense:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
(116,212
|
)
|
|
(56,757
|
)
|
Interest
income and other
|
|
|
16
|
|
|
177,650
|
|
|
19,384
|
|
Foreign
Exchange Gain
|
|
|
|
|
|
302,803
|
|
|
55,281
|
|
Total
Other Income
|
|
|
|
|
|
364,241
|
|
|
17,908
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before taxes
|
|
|
|
|
|
(1,524,054
|
)
|
|
(1,239,507
|
)
|
Income
taxes
|
|
|
17
|
|
|
0
|
|
|
0
|
|
Net
Loss
|
|
|
|
|
|
(1,524,054
|
)
|
|
(1,239,507
|
)
|
Other
Comprehensive Loss/Income:
|
|
|
|
|
|
0
|
|
|
0
|
|
Translation
adjustment
|
|
|
|
|
|
(168,631
|
)
|
|
(309,709
|
)
|
Comprehensive
loss
|
|
|
|
|
|
(1,692,685
|
)
|
|
(1,549,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted Weighted Average Shares
|
|
|
|
|
|
55,835,875
|
|
|
30,294,665
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted Net Loss Per Share
|
|
|
|
|
|
(0.027
|
)
|
|
(0.041
|
)
|
See
accompanying summary of accounting policies and the notes to the financial
statements.
SES
SOLAR INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(in
$, except per share amounts)
|
|
Common
Stock
|
|
|
|
|
|
Accumulated
Other Comprehensive Income
|
|
Total
|
|
|
|
Shares
|
|
Amount
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Translation
Adjustment
|
|
Shareholders’
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 01, 2006
|
|
|
48,286,817
|
|
|
48,287
|
|
|
373,387
|
|
|
(1,006,807
|
)
|
|
82,893
|
|
|
(502,240
|
)
|
Net
Loss
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,239,507
|
)
|
|
0
|
|
|
(1,239,507
|
)
|
Translation
Adjustment
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(309,709
|
)
|
|
(309,709
|
)
|
Shares
issued in an offering
|
|
|
5,050,000
|
b
|
|
5,050
|
|
|
1,001,314
|
|
|
|
|
|
0
|
|
|
1,006,364
|
|
Shares
issued in an offering
|
|
|
4,976,350
|
c
|
|
4,976
|
|
|
3,558,091
|
|
|
0
|
|
|
0
|
|
|
3,563,067
|
|
Shares
Acquired in the Public shell (Note 14)
|
|
|
10,668,000
|
|
|
10,668
|
|
|
28,401
|
|
|
0
|
|
|
0
|
|
|
39,069
|
|
Shares
issued in an offering
|
|
|
4,100,001
|
d
|
|
4,100
|
|
|
3,316,900
|
|
|
0
|
|
|
0
|
|
|
3,321,000
|
|
Finder’s
Fee
|
|
|
|
b
|
|
|
|
|
(228,000
|
)
|
|
|
|
|
|
|
|
(228,000
|
)
|
Net
shares activity
|
|
|
24,794,351
|
|
|
24,794
|
|
|
7,676,706
|
|
|
0
|
|
|
0
|
|
|
7,701,500
|
|
Balance
at December 31, 2006
|
|
|
73,081,168
|
|
|
73,081
|
|
|
8,050,093
|
|
|
(2,246,314
|
)
|
|
(226,816
|
)
|
|
5,650,044
|
|
Net
Loss
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,524,054
|
)
|
|
0
|
|
|
(1,524,054
|
)
|
Translation
Adjustment
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(168,631
|
)
|
|
(168,631
|
)
|
Balance
at December 31, 2007
|
|
|
73,081,168
|
|
|
73,081
|
|
|
8,050,093
|
|
|
(3,770,368
|
)
|
|
(395,447
|
)
|
|
3,957,359
|
|
a
The number of shares has been retroactively restated to show the correct par
value of shares.
b
On May
30, 2006, SES USA issued 5,050,000 shares to 3 off-shore investors at an issue
price of $0.20 per share for total proceeds of $1,010,000, less a finders fees
of $3,636. The issuance of the common shares was made in reliance upon
Regulation S and/or Section 4(2) of the Securities Act of 1933 in an offshore
transaction to non-U.S. persons (as that term is defined in Regulation S of
the
Securities Act of 1933). In connection with the reverse acquisition the Company
paid a commission of $228,000 to the outside consultant who found the Public
shell and arranged this transaction (finder’s fee). This share issuance was
contingent upon consummation of the reverse acquisition.
c
On
September 18, 2006, SES USA issued 4,976,350 additional shares to 19 investors
at an issue price of $0.80 per share for total proceeds of $3,981,080, less
finders fees $418,013, 4,626,350 of which were issued in reliance upon
Regulation S and/or Section 4(2) of the Securities Act of 1933 in an offshore
transaction to non-US persons. The remaining 350,000 were issued in accordance
with Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of
1933
to US investors, each of whom represented that he, she or it was an accredited
investor.
d
On
November 22, 2006, SES USA issued an aggregate of 4,100,001 common shares to
three (3) investors at a price of $0.90 per share for gross proceeds of
$3,690,000, less finder’s fees of $369,001 pursuant to private placement
subscription agreements. The shares were issued in reliance upon Regulation
S
and/or Section 4(2) of the Securities Act of 1933 by issuing the shares to
non-U.S. persons (as that term is defined in Regulation S of the Securities
Act
of 1933) in an offshore transaction.
See
accompanying summary of accounting policies and the notes to the financial
statements.
SES
SOLAR INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
$, except per share amounts)
|
|
YEARS ENDED
|
|
|
|
December
31st
2007
|
|
December
31st
2006
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(1,524,054
|
)
|
|
(1,239,507
|
)
|
Adjustments
to reconcile net loss to cash used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
59,104
|
|
|
45,091
|
|
Changes
in operating assets and liabilities:
|
|
|
0
|
|
|
0
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
Receivables,
including Due from Related Party
|
|
|
(33,902
|
)
|
|
223,500
|
|
Inventory
|
|
|
(13,791
|
)
|
|
0
|
|
Other
current assets
|
|
|
(393,932
|
)
|
|
(185,405
|
)
|
Deferred
Expenses
|
|
|
240,000
|
|
|
(420,000
|
)
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
(4,517
|
)
|
|
(213,294
|
)
|
Billings
in excess of cost and estimated earnings
|
|
|
350,407
|
|
|
7,768
|
|
Net
cash provided/used in operating activities
|
|
|
(1,320,685
|
)
|
|
(1,781,847
|
)
|
Cash
Flows from Investing Activities:
|
|
|
|
|
|
|
|
Property,
plants and equipment
|
|
|
(5,260,502
|
)
|
|
(146,791
|
)
|
Advance
payments for machinery
|
|
|
(369,814
|
)
|
|
0
|
|
Net
cash Acquired in a reverse Acquisition
|
|
|
0
|
|
|
164,234
|
|
Net
cash provided/used in investing activities
|
|
|
(5,630,316
|
)
|
|
17,443
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
|
|
|
Repayment/Proceed
of loans
|
|
|
3,344,062
|
|
|
(50,482
|
)
|
Bank
loan
|
|
|
1,210,285
|
|
|
399,280
|
|
Proceeds
from the issuance of common stock, net of finders fees
|
|
|
0
|
|
|
7,662,431
|
|
Net
cash provided by financing activities
|
|
|
4,554,347
|
|
|
8,011,229
|
|
Increase
(decrease) in cash and cash equivalents
|
|
|
(2,396,654
|
)
|
|
6,246,825
|
|
Effect
of exchange rate changes on cash
|
|
|
(190,979
|
)
|
|
(265,329
|
)
|
Cash
and cash equivalents, beginning of year
|
|
|
6,016,666
|
|
|
35,170
|
|
Cash
and cash equivalents, end of year
|
|
|
3,429,033
|
|
|
6,016,666
|
|
Supplemental
Cash Flow Information (21):
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
|
116,212
|
|
|
56,757
|
|
Supplemental
disclosure of non-cash operating and investing activities (21):
|
|
|
|
|
|
|
|
Non
cash transaction, Property, plants and equipment in accounts
payable
|
|
|
3,167,499
|
|
|
0
|
|
See
accompanying summary of accounting policies and the notes to the financial
statements.
1.
Organization
and Nature of Operations
Organization
- SES SOLAR INC., (the “Company”, “SES USA”, “our”, “we” and “us”) is the result
of a reverse acquisition accomplished on September 27, 2006 between SES USA,
a
Delaware company, which had no operations and net assets of $39,069, and Société
d’Energie Solaire SA (“SES Switzerland”), a Swiss company. SES USA acquired all
of the outstanding shares of SES Switzerland. For accounting purposes, the
acquisition has been treated as a recapitalization of SES Switzerland with
SES
Switzerland as the acquirer (reverse acquisition). SES Switzerland acquired
10,668,000 of SES USA in the transaction. The historical financial statements
prior to September 27 are those of SES Switzerland. The reverse acquisition
resulted in a change of control of SES USA, with the former stockholders of
SES
Switzerland owning approximately 70% of SES USA and SES Switzerland becoming
SES
USA’s wholly owned subsidiary.
SES
Switzerland was formed in 2001 for the purpose of researching, developing,
manufacturing and selling innovative products to the solar photovoltaic market.
From its inception, SES Switzerland has focused primarily on manufacturing
and
installing silicon photovoltaic solar cells panels. The principal source of
revenue for the Company has been the sale of photovoltaic panels in turn-key
installations, manufactured in house or purchased from subcontractors, to
electric companies, local governmental agencies and private house
owners.
In
connection with the reverse acquisition accomplished on September 27, 2006,
the
Company entered into the Credit Line Escrow Agreement dated September 1, 2006,
as amended October 27, 2006 and November 30, 2006, with Christiane Erné,
Jean-Christophe Hadorn, and Claudia Rey. Pursuant to the terms of the Credit
Line Escrow Agreement, the parties agreed to escrow 24,143,410 of the 48,286,817
shares of common stock issued in the merger to Christiane Erné (21,729,068
shares), Jean-Christophe Hadorn (1,207,171 shares) and Claudia Rey (1,207,171
shares). The 24,143,410 shares of common stock are to be delivered from escrow
as follows:
|
(a)
|
into
a subsequent escrow in accordance with the terms of the Long Term
Escrow
Agreement (as described below) if the Company receives financing
of at
least $10,660,412 (CHF 12 million) on or before November 30, 2007;
or
|
|
(b)
|
to
the Company for immediate cancellation if it do not receive financing
of
at least $10,660,412 (CHF 12 million) on or before November 30, 2007.
|
On
September 18, 2007, we entered into a loan agreement with the Geneva
(Switzerland) State Department of Energy (“ScanE”) in the principal amount of
$3.9 million (CHF 4.5 million). On November 13, 2007, the Company entered into
an amended agreement with Banque Cantonal de Genève whereby our Construction
Credit Agreement dated December 20, 2006 was increased from $4.3 million (CHF
4.8 million) to $7.6 million (CHF 8.5 million). As a result these recent
financings, and in combination with its other available financing arrangements
as discussed in the Liquidity section to Management’s Discussion and Analysis,
the Company obtained total financing in excess of the amount required to satisfy
the Credit Line Escrow Agreement such that the 24,143,410 shares have been
transferred from the Credit Line Escrow to the Long Term Escrow.
SES
USA
engaged in a second round of financing on November 7, 2006 pursuant to which
SES
USA issued 4,100,001 shares to third parties resulting in a further dilution
of
the historical and former shareholders of SES Switzerland to approximately
66%.
2.
Future
Operations
SES
Switzerland has experienced losses from operations and anticipates incurring
losses in the near future. SES Switzerland has, however, developed and is in
the
process of patenting a new assembly technology for solar panels, which the
Company believes will allow higher quality electrical contacts, better
performance and highly reduced costs resulting from the increased automation
processes.
SES
Switzerland’s current business plan includes the development of a new assembly
line based on its proprietary technology and the construction of a manufacturing
facility in the suburbs of Geneva, Switzerland to produce solar panels or
modules and solar tiles at a lower cost. These activities require the Company
to
design and manufacture prototype panels, have them approved in accordance with
European and other standards, manufacture in series and sell them in the main
markets for solar photovoltaic cells. Costs incurred in manufacturing prototype
panels have been expensed as research and development costs.
SES
USA
does not believe that it can achieve profitability until development;
implementation and commercialization of new products manufactured through the
new assembling process are operational.
3.
Summary
of Significant Accounting Policies
The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, SES Switzerland. All significant inter-company accounts
and transactions have been eliminated in the consolidation.
The
preparation of financial statements in conformity with United States generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying disclosures of the Company. Although these estimates are
based on management’s knowledge of current events and actions that the Company
may undertake in the future, actual results may differ from such
estimates.
Foreign
Currency Translation
—The
currency of SES USA is the U.S. dollar whereas the wholly owned subsidiary’s
functional currency is the Swiss Franc. The financial statements of the
Company’s wholly owned subsidiary, SES Switzerland, are translated to U.S.
dollar equivalents under the current method in accordance with SFAS No. 52,
“Foreign Currency Translation.” Assets and liabilities are translated into U.S.
dollar equivalents at rates of exchange in effect at the balance sheet date.
Average rates for the year are used to translate revenues and expenses. The
cumulative translation adjustment is reported as a component of accumulated
other comprehensive income (loss). Foreign currency differences from
intercompany receivables and payables are recorded as Foreign Exchange
Gains/Losses in the Statement of Operations.
The
exchange rates used for translating the financial statements are listed
below:
Average
Rates
|
|
2007
|
|
2006
|
|
|
|
CHF
|
|
CHF
|
|
$
|
|
|
1.19870
|
|
|
1.25225
|
|
Balance
Sheet year-end rates
|
|
2007
|
|
2006
|
|
|
|
CHF
|
|
CHF
|
|
$
|
|
|
1.12566
|
|
|
1.21975
|
|
Cash
Equivalents
—The
Company considers all highly liquid debt securities purchased with an original
maturity of three months or less to be cash equivalents.
Receivables
and Credit Policies
—
The
Company’s accounts receivables primarily consists of trade receivables.
Management reviews accounts receivables on a monthly basis to determine if
any
receivables will potentially be uncollectible. The Company uses estimates to
determine the amount of the allowance for doubtful accounts necessary to reduce
accounts receivable and unbilled receivables to their expected net realizable
value. The Company estimates the amount of the required allowance by reviewing
the status of past-due receivables and analyzing historical bad debt trends.
Actual collection experience has not varied significantly from estimates, due
primarily to credit policies, collection experience and the Company’s stability
as it relates to its current customer base. Receivables consist of revenues
billed to customers upon achievement of contractual obligations. Based on the
information available, the Company believes its allowance for doubtful accounts
as of December 31, 2007 is adequate.
Product
Inventory
—Product
inventory is stated at the lower of cost or market. Cost is determined using
the
first-in, first-out (FIFO) method and includes certain charges directly and
indirectly incurred in bringing product inventories to the point of sale.
Inventory is accounted for at the lower of cost or market, and as a result,
write-offs/write-downs occur due to damage, deterioration, obsolescence, changes
in prices and other causes.
Property
and Equipment
—Property
and equipment is stated at cost. Depreciation is computed using straight-line
method over estimated useful lives of 3 to 20 years. Expenditures for
maintenance and repairs, which do not materially extend the useful lives of
property and equipment, are charged to operations as incurred. When property
or
equipment is retired or otherwise disposed of, the property accounts are
relieved of costs and accumulated depreciation and any resulting gain or loss
is
recognized.
Warranties
—Since
the Company’s commencement it has had no warranty claims. The Company’s
production was low and components were purchased for photovoltaic installations,
all of which have their own warranties. Since the Company has not yet started
producing its own photovoltaic cells and warranty claims can be thus exercised
against its suppliers, the Company does not believe that discussion of
warranties is a critical accounting policy currently, but this may become so
in
the future.
Revenue
Recognition
—The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
No. 104, “Revenue Recognition” (SAB 104). SAB 104 requires that four basic
criteria must be met before revenue can be recognized: (1) persuasive
evidence of an arrangement exists; (2) delivery has occurred or services
rendered; (3) the seller’s price to the buyer is fixed and determinable;
and (4) collection is reasonably assured.
Revenues
and profits from general management of construction-type contracts are
recognized on the completed-contract method and therefore when the project
is
completed. A contract is considered complete when all costs except insignificant
items have been incurred and the installation is operating according to
specifications or has been accepted by the customer. Contract costs include
all
direct materials and labor costs and those indirect costs related to contract
performance, such as indirect labor, supplies, tools, repairs and depreciation
costs. Costs in excess of amounts billed are classified as current assets under
Work in Progress. Billings in excess of cost are classified under current
liabilities as Billings in Excess of Cost and Estimated Earnings. Any
anticipated losses on contracts are charged to operations as soon as they are
determinable. No unbilled revenue has been recognized so far.
For
the
years ended 2007 and 2006, the Company has no billed or unbilled amount
representing claims or other similar items subject to uncertainty concerning
their determination or ultimate realization. Amounts outstanding as at year
end
are expected to be collected in 2008.
Income
Taxes
—The
Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
“Accounting for Income Taxes”, which requires an asset and liability approach to
financial accounting and reporting for income taxes. Deferred income tax assets
and liabilities are computed annually for differences between the financial
statement and tax bases of assets and liabilities that will result in taxable
or
deductible amounts in the future based on enacted tax laws and rates applicable
to the period in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense (benefit)
is
the tax payable or refundable for the period plus or minus the change during
the
period in deferred tax assets and liabilities. The Company’s tax basis for
assets and liabilities is identical for the financial statements and tax
reporting. Accordingly, the only deferred tax position is the benefit with
respect to the net operating loss. The Company records a valuation allowance
to
reduce the deferred tax asset to the amount that is estimated to be more likely
than not to be realized.
Comprehensive
Income
- The
Company accounts for comprehensive income according to Statement of Financial
Accounting Standards (SFAS) No. 130 “Reporting Comprehensive Income”. Effective
for fiscal years beginning after December 15, 1997, FAS 130 states that
comprehensive income is net income, plus certain other items that are recorded
directly to shareholders’ equity such as foreign currency translation
adjustments and unrealized gains (losses) on marketable securities.
Loss
Per Share
—Loss
per
share is presented in accordance with the provisions of SFAS No. 128,
“Earnings Per Share”. Basic earnings per share does not include the effects of
potentially dilutive stock options and is computed by dividing income available
to common stockholders by the weighted average number of shares of common stock
outstanding for the period. Diluted earnings per share reflects, in periods
in
which they have a dilutive effect, commitments to issue common stock and common
stock issuable upon exercise of stock options for periods in which the options’
exercise price is lower than the Company’s average share price for the period.
As per an agreement dated September 1, 2006 (as amended), related to the reverse
acquisition, the Company is required to obtain additional financing in the
amount of CHF12,000,000 ($10,660,412) no later than November 30, 2007 to build
a
manufacturing plant in Plan-les-Ouates. Otherwise, 24,143,410 escrowed shares
will be cancelled. As of September 18, 2007, the Company entered into a loan
agreement with the Geneva (Switzerland) State Department of Energy (“ScanE”) in
the principal amount of $3.9 million (CHF 4.5 million). On November 13, 2007,
the Company entered into an amended agreement with Banque Cantonal de Genève
whereby its Construction Credit Agreement dated December 20, 2006 was increased
from $4.1 million (CHF 4.8 million) to $7.6 million (CHF 8.5 million). As a
result these recent financings, and in combination with its other available
financing arrangements, the Company obtained total financing in excess of the
amount required to satisfy the Credit Line Escrow Agreement such that the
24,143,410 shares have been transferred from the Credit Line Escrow to the
Long
Term Escrow (see notes 14). The escrowed shares are included in earnings per
share once conditions were met (September 18, 2007).
Stock
options of 43,110 were granted to a non-employee, Hogan & Hartson LLP, and
outstanding as of June 18, 2007 and are not included in the Earnings per Share.
The grant of options was cancelled by mutual agreement on July 18, 2007 without
any options being exercised.
|
|
2007
|
|
2006
|
|
Basic
Weighted average shares outstanding
|
|
|
55,835,875
|
|
|
30,294,665
|
|
Diluted
weighted average shares outstanding
|
|
|
55,835,875
|
|
|
30,294,665
|
|
Note:
Due
to the net loss, the calculation of the effect of common stock equivalents
due
to issuance of warrants is excluded because of anti-dilution. The number of
shares of common stock listed as beneficially owned by one selling stockholder
includes 1,500,000 shares of common stock potentially issuable upon exercise
of
1,500,000 common share purchase warrants. Each common share purchase warrant
is
exercisable until November 22, 2010 at an exercise price of $0.90 per share.
As
of the December 31, 2007 balance sheet date, the warrants were not yet
exercised. Also, they are not included in the computation of diluted loss per
share because their effect was anti-dilutive.
Long-Lived
Assets
-
Long-lived assets, other than goodwill, are evaluated for impairment when events
or changes in business circumstances indicate that the carrying amount of the
assets may not be fully recoverable. An impairment loss would be recognized
when
estimated undiscounted future cash flows expected to result from the use of
these assets and their eventual disposition is less than their carrying amount.
The determination of whether or not long-lived assets have become impaired
involves a significant level of judgment in the assumptions underlying the
approach used to determine the estimated future cash flows expected to result
from the use of those assets. Changes in the Company’s strategy, assumptions
and/or market conditions could significantly impact these judgments and require
adjustments to recorded amounts of long-lived assets.
Research
and Development Costs
—Research
and development costs are expensed as incurred. Research and development costs
are not disclosed separately in the Notes to the Financial Statements, but
are
disclosed separately in the Income Statement.
Fair
Value of Financial Instruments
—The
estimated fair values for financial instruments are determined at discrete
points in time based on relevant market information. These estimates involve
uncertainties and cannot be determined with precision. The carrying amounts
of
receivables, inventory, accounts payable and accrued liabilities approximate
fair value because of the short-term maturities of these instruments. The fair
value of the long-term debt is estimated based on anticipated interest rates
which management believes would currently be available to the Company for
similar issues of debt, taking into account the current credit risk of the
Company and the other market factors. The fair value approximates carrying
value
of the long-term debt.
4.
Impact
of Recently Issued Accounting Pronouncements
In
June
2006, the Financial Accounting Standards Board issued interpretation No. 48
(“FIN 48”), “Accounting for Uncertainty in Income Taxes”. FIN 48 establishes the
minimum threshold for recognizing, and a system for measuring, the benefits
of
tax-return positions in financial statements. The provisions of FIN 48 were
effective for the Company as of January 1, 2007 and required application of
FIN
48 to all existing tax positions upon initial adoption. The adoption of the
standard had no effect on the Company’s financial condition or results of
operation.
The
Company has no unrecognized tax benefits as of January 1, 2007 and December
31,
2007. The federal and cantonal tax authorities in Switzerland have assessed
that
the Company has no income taxes based on the returns that the Company has filed
up to and including fiscal year 2006. These assessments are final. Furthermore,
the Company does not expect any changes to the tax returns that were filed
for
the fiscal year 2006 since the Company has generated net losses.
In
December 2007, the FASB issued SFAS No. 141(R),
“
Business
Combinations.” SFAS 141(R) requires all business combinations completed
after the effective date to be accounted for by applying the acquisition method
(previously referred to as the purchase method). Companies applying this method
will have to identify the acquirer, determine the acquisition date and purchase
price and recognize at their acquisition-date fair values the identifiable
assets acquired, liabilities assumed, and any noncontrolling interests in the
acquiree. In the case of a bargain purchase the acquirer is required to
reevaluate the measurements of the recognized assets and liabilities at the
acquisition date and recognize a gain on that date if an excess remains.
SFAS 141(R) becomes effective for fiscal periods beginning after
December 15, 2008. The Company is currently evaluating the impact of
SFAS 141(R).
In
September 2006, the FASB issued Statement of Financial Accounting Standards
(“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS
No. 157 defines fair value, establishes a framework for measuring fair
value in accordance with generally accepted accounting principles, and expands
disclosures about fair value instruments. This statement does not require any
new fair value measurements; rather, it applies under other accounting
pronouncements that require or permit fair value measurements. The provisions
of
this statement are to be applied prospectively as of the beginning of the fiscal
year in which this statement is initially applied, with any transition
adjustment recognized as a cumulative effect adjustment to the opening balance
of retained earnings. The provisions of SFAS No. 157 are effective for
fiscal years beginning after November 15, 2007. The Company has not
determined the effect, if any, the adoption of this statement will have on
its
consolidated financial statements.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities,” (“SFAS No. 159”) which provides
companies an option to report selected financial assets and liabilities at
fair
value. SFAS No. 159 requires companies to provide information helping financial
statement users to understand the effect of a company’s choice to use fair value
on its earnings, as well as to display the fair value of the assets and
liabilities a company has chosen to use fair value for on the face of the
balance sheet. Additionally, SFAS No. 159 establishes presentation and
disclosure requirements designed to simplify comparisons between companies
that
choose different measurement attributes for similar types of assets and
liabilities. The statement is effective as of the beginning of an entity’s first
fiscal year beginning after November 15, 2007. The Company has not
determined the effect, if any, the adoption of this statement will have on
its
consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 160,
”
Noncontrolling
Interests in Consolidated Financial Statements” (an Amendment of ARB 51).
SFAS 160 amends ARB 51 to establish accounting and reporting standards for
the noncontrolling interest in a subsidiary and for the deconsolidation of
a
subsidiary. The statement requires consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and the
noncontrolling interest. It also requires disclosure on the face of the
consolidated statement of income of the amounts of consolidated net income
attributable to the parent and to the noncontrolling interest. In addition
this
statement establishes a single method of accounting for changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation and
requires that a parent recognize a gain or loss in net income when a subsidiary
is deconsolidated. SFAS 160 becomes effective for fiscal periods beginning
after December 15, 2008. The Company is currently evaluating the impact of
SFAS 160.
5.
Sales
Contracts under Completed-Contract Method (CCM)
SES
Switzerland enters into contracts for installation of solar cell panels with
public or private building owners. The timeframe between the contract’s
signature and the connection to the electrical network (grid), being the due
date for the contract’s completion, can vary between 6 months and 2 years. SES
Switzerland recognizes revenues under the Completed Contract Method (CCM),
based
on contractual obligations and deliveries. Until completion of the contract,
advances from customers and advances to suppliers are recorded separately in
the
balance sheet.
All
sales
recognized during the years 2007 and 2006 are project revenues.
6.
Cash
and Cash Equivalents
|
|
$ (held in
CHF)
|
|
$ (held in $)
|
|
$ (held in
EUR)
|
|
$ TOTAL
2007
|
|
$ TOTAL
2006
|
|
Cash
on hand
|
|
|
179,046
|
|
|
9,463
|
|
|
85,525
|
|
|
274,033
|
|
|
272,146
|
|
Short-term
Investments
|
|
|
-
|
|
|
3,155,000
|
|
|
-
|
|
|
3,155,000
|
|
|
5,744,520
|
|
Cash
and Cash Equivalents
|
|
|
179,046
|
|
|
3,164,463
|
|
|
85,525
|
|
|
3,429,033
|
|
|
6,016,666
|
|
Cash
and
cash equivalents are available to the Company, and there is no restriction
or
limitation on withdrawal or use of these funds. The Company’s cash equivalents
are placed with highly credit rated financial institutions. The carrying amount
of these assets approximates their fair value.
7.
Accounts
Receivable and Significant Customers
At
December 31, 2007 and 2006, the Company’s accounts receivable balances were
$47,356 and $10,386, respectively. Significant customers are summarized
below:
|
|
Receivables
|
|
|
|
2007
|
|
2006
|
|
|
|
$
|
|
$
|
|
A
|
|
|
11,255
|
|
|
10,386
|
|
F
|
|
|
15,771
|
|
|
0
|
|
G
|
|
|
20,330
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Total
Accounts Receivable
|
|
|
47,356
|
|
|
10,386
|
|
Revenues
for 2007 and 2006 were $1,344,794 and $129,275, respectively. Significant
customers are summarized below:
|
|
Revenues
|
|
|
|
2007
|
|
2006
|
|
|
|
$
|
|
$
|
|
A
|
|
|
0
|
|
|
61,508
|
|
B
|
|
|
0
|
|
|
50,309
|
|
D
|
|
|
1,192,964
|
|
|
0
|
|
E
|
|
|
52,023
|
|
|
0
|
|
F
|
|
|
89,263
|
|
|
0
|
|
Others
|
|
|
10,544
|
|
|
17,458
|
|
|
|
|
|
|
|
|
|
Total
Revenues
|
|
|
1,344,794
|
|
|
129,275
|
|
8.
Inventory
Inventory
is summarized as follows:
|
|
2007
|
|
2006
|
|
|
|
$
|
|
$
|
|
Raw
Materials and Others
|
|
|
97,159
|
|
|
89,665
|
|
Finished
Goods
|
|
|
174,635
|
|
|
147,610
|
|
Total
Inventory
|
|
|
271,794
|
|
|
237,275
|
|
9.
Property
and Equipment
Property
and equipment is summarized as follows:
|
|
2007
|
|
2006
|
|
|
|
$
|
|
$
|
|
Machinery
and equipment
|
|
|
360,887
|
|
|
333,048
|
|
Office
furniture and equipment
|
|
|
76,606
|
|
|
43,789
|
|
Equipment
|
|
|
437,493
|
|
|
376,837
|
|
Solar
plant
|
|
|
3,785,521
|
|
|
0
|
|
Building
construction
|
|
|
5,398,153
|
|
|
219,619
|
|
Property
and equipment
|
|
|
9,621,167
|
|
|
596,456
|
|
Less
accumulated depreciation and amortization
|
|
|
(339,014
|
)
|
|
(254,779
|
)
|
Property
and equipment, net
|
|
|
9,282,153
|
|
|
341,677
|
|
Depreciation
and amortization expense of property and equipment for the years ended
December 31, 2007 and 2006 was $59,104 and $45,090, respectively. The
company has defined the following useful lives for fixed assets: Machinery
and
equipment: 8 years, Office furniture and equipment: 3 (IT equipment) to 5 years
(office furniture) Solar plant : 20 years.
10.
Borrowings
Under Revolving Credit Facility, Short and Long-Term Loan
Short-Term
Loan
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
State
Department of Energy Geneva (Switzerland)
|
|
|
861,248
|
|
|
409,920
|
|
State
Department of Energy Geneva (Switzerland)
|
|
|
3,997,665
|
|
|
|
|
UBS
|
|
|
1,288,815
|
|
|
|
|
|
|
|
6,147,728
|
|
|
409,920
|
|
Long-Term
Loan
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
Banque
Cantonale de Genève
|
|
|
7,563
|
|
|
|
|
State
Department of Energy Geneva (Switzerland)
|
|
|
|
|
|
794,810
|
|
|
|
|
7,563
|
|
|
794,810
|
|
On
November 3, 2003, SES Switzerland received a loan from the Geneva (Switzerland)
State Department of Energy of up to CHF1,000,000 ($888,370). SES Switzerland
used CHF969,470 ($861,248) as at December 31, 2007, and CHF969,470 ($794,810,
Long-Term) as at December 31, 2006. The loan is to be repaid on March 31, 2008.
The loan bears interest at a rate of 4% p.a. The stockholders, Christiane Erné,
Jean-Christophe Hadorn and Claudia Rey, have pledged 10,000,000 issued shares
of
the Company as a guarantee for the loan. At the moment, the Company does not
have any plans to repay the loan before its due date.
SES
Switzerland was also granted a loan by the Geneva (Switzerland) State Department
of Energy (“ScanE”) in the amount of CHF500,000 ($444,184) on January 21,
2004 with the funds to be available contingent upon SES Switzerland’s
meeting certain conditions precedent, which were fulfilled by March 22, 2006.
The loan has a term of 18 months and carried an interest rate of 5% p.a. with
repayment due on September 21, 2007.
On
August
28, 2007, CHF500,000 ($444,184) in principal and CHF37,500 ($31,284) of interest
were reimbursed.
A
new six
month credit facility of CHF4,500,000 ($3,997,665) was signed on September
18,
2007 with ScanE. The loan bears interest at 5%. The proceeds were received
on
October 1, 2007 and will be reimbursed on March 17, 2008. This loan is secured
by certain photovoltaic modules purchased by the Company for installation on
the
roof of the new manufacturing facility as well as by the 10,000,000 shares
currently held in escrow.
SES
Switzerland also has a revolving credit line with UBS which was increased from
CHF100,000 ($88,837) to CHF2,000,000 ($1,776,735) as of September 4, 2007,
used
mainly to cover short-term cash needs. The credit line is secured by the short
term deposits in US dollars with UBS, amounting to $3,155,000 as at December
31,
2007 and has not an expiration date. The credit line bears interest at the
rate
of 5%. The credit line can be cancelled by either party at any time. The credit
facility was used for CHF1,450,764 ($1,288,815) as at December 31, 2007 (0
as at
December 31, 2006). As of January 31, 2008, the credit line has been increased
to CHF3,000,000 ($2,631,579) and the interest rate has been reduced to
4.75%.
SES
Switzerland also has a Construction Credit Agreement with Banque Cantonale
de
Genève dated December 20, 2006 in the amount of $4,264,165 (CHF 4.8 million),
which is intended for financing the construction of our new manufacturing
facility. The loan was amended on November 13, 2007 and increased from CHF
4.8
million to CHF 8.5 million ($7,551,126). The amended agreement must be drawn
down before the later of completion of the construction or December 11, 2008.
As
of December 31, 2007, we used $7,563 (CHF8,513) of the credit line as at
December 31, 2007 ($0 as at December 31, 2006). The loan bears interest at
a
rate of 3.5% and is secured by a second lien exclusive mortgage certificate
of
CHF 9,000,000 ($7,995,309) on the facility.
On
December 20, 2006, SES Switzerland signed a construction loan with Ms. Christine
Erné, the Company’s principal stockholder, to enable SES Switzerland to commence
construction of the new manufacturing facility near Geneva, Switzerland during
2007. The construction loan is in the amount of CHF2,700,000 ($2,398,593).
The
Company will pay interest at the rate of 4.5% p.a. on used funds. The term
of
the loan is two years. The funds were to be disbursed as soon as construction
has begun; however another credit source has been used instead and the loan
facility has been cancelled as at November 26, 2007.
11.
Billings
in Excess of Cost and Estimated Earnings
Billings
in Excess of Cost and Estimated Earnings
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
Prepayments
to suppliers
|
|
|
43,234
|
|
|
448,521
|
|
Work
in progress
|
|
|
367,960
|
|
|
159,939
|
|
Prepayments
from customers
|
|
|
(918,238
|
)
|
|
(732,033
|
)
|
|
|
|
(507,044
|
)
|
|
(123,573
|
)
|
12.
Commitments
and Contingencies:
Operating
Leases
- lease
expenses for the years ended December 31, 2007 and 2006 were $135,453 and
$138,163, respectively.
The
following table presents future minimum lease commitments (concerning the lease
of a vehicle) under operating leases at December 31, 2007
|
|
Operating
Leases
|
|
2008
|
|
|
14,891
|
|
2009
|
|
|
12,501
|
|
Thereafter
|
|
|
-
|
|
Total
|
|
|
27,392
|
|
In
addition to the amounts disclosed above, SES Switzerland has an operating lease
for its office located at 129 Route de Saint-Julien, Plan-les-Ouates,
Switzerland (a suburb of Geneva). The rent is $43,467 (CHF52,104) per year.
The
initial lease term ended on February 28, 2008. The lease has been renewed with
the same conditions for the next 12 months.
SES
Switzerland also leases a 1,654 square meter industrial facility in Härkingen,
Switzerland. The monthly fixed rent is CHF7,232 (approximately $6,033). The
lease has no specific termination date. The lease may be cancelled with six
months notice at the end of the month, except for December, which requires
an
additional month notice.
On
May
27, 2005, we received authorization from the State of Geneva to build a
manufacturing facility on other property in Plan-les-Ouates, Switzerland and
we
received a lease for the land in February 2007. The lease for use of the land
is
for 60 years commencing on July 1, 2006.
The
following are the lease commitments.
|
|
Use
of Land
|
|
2008
|
|
|
60,120
|
|
2009
|
|
|
60,120
|
|
2010
|
|
|
60,120
|
|
2011
|
|
|
60,120
|
|
2012
|
|
|
60,120
|
|
Thereafter
|
|
|
3,216,400
|
|
Total
|
|
|
3,517,000
|
|
SES
Switzerland has no non-cancellable operating leases.
Employment
Agreements
—As
at
year end, SES Switzerland employed 3 employees and 2 executive officers. The
terms of employment are supplemented by Swiss Commercial Law which requires
in
case of termination of the contract, a minimum of one month’s paid notice the
first year, 2 months paid notice the second year and 3 month’s paid notice of
termination thereafter. Mrs. Crisafulli and Mr. Erné have written employment
agreements.
Flannel
Management sarl has a consulting agreement with SES Switzerland effective
October 1, 2006. Flannel Management sarl receives a monthly consulting fee
of
CHF20,000 ($16,685) (using exchange rate set forth in Note 3 to the Consolidated
Financial Statements hereto). The contract is for a 10-year term and if earlier
terminated, the Company nevertheless pays the consulting fees for the remainder
of the term. One of Flannel Management sarl’s consultants is Philippe
Crisafulli, the husband of Sandrine Crisafulli, Chief Financial Officer of
SES
USA and SES Switzerland.
During
the year 2007, Jean-Christophe Hadorn, the CEO, and a stockholder of the
Company, invoiced CHF124,182 ($103,598) to SES Switzerland as a consultant,
of
which CHF22,159 ($18,486) was outstanding at year-end.
Litigation
—The
Company is from time to time subject to routine litigation incidental to its
business. There are no such litigation currently pending.
Capital
Commitments
—At
December 31, 2007, the Company has an outstanding purchase order of EUR448,600
($660,716) for the future construction of a new machine to be used in the new
plant for solar modules production. A letter of credit in the amount of
EUR224,300 ($330,358) has been issued by SES Switzerland’s bank as a partial
guarantee of payment. There were no charges to the Company by the bank for
the letter of credit. The Company has made an advance of EUR269,160
($396,432) for the purchase of this machine. The balance due will be paid upon
delivery of the machine.
13.
Business
Segments
All
of
the Company’s operations are conducted through its wholly owned subsidiary SES
Switzerland, and are limited to the assembly and installation of photovoltaic
panels in Switzerland, which is the only business segment of the
Company.
14.
Stockholders’
Equity:
Common
Stock
—
The
Company has 100,000,000 shares of common stock authorized, par value $0.001
per
share, and 73,081,168 shares issued and outstanding.
In
May
2006, the Company issued 5,050,000 shares of common stock at a price of $0.20
per share for cash proceeds of $1,006,364, net of issue costs.
On
May
15, 2006, the Company entered into a non-binding term sheet with SES
Switzerland, to acquire all of the shares of SES Switzerland in consideration
of
the issuance of shares which will equate to approximately 70% of the issued
and
outstanding shares at the consummation of the acquisition. In accordance with
the share exchange agreement, the Company deposited CHF 1,000,000
($816,700) of the proceeds from the private placement into the trust account
of
a Swiss lawyer. The deposited funds were to be transferred into escrow with
another Swiss lawyer upon the signing of the share exchange agreement and held
until the closing of the agreement. In the event that: (i) SES Switzerland
breached the terms of the agreement; (ii) the Company elected to terminate
the
agreement in its sole discretion; or (iii) the agreement was not signed on
or
prior to June 15, 2006, the lawyer would release the escrowed funds to the
Company. The Company entered into amended letter agreements dated June 15,
2006
and July 15, 2006 to extend the dates of the Letter of Intent. The amount of
$816,700 was released from the trust account for the use of SES Switzerland
as
of October 13, 2006.
On
September 18, 2006 the Company issued 4,976,350 shares at $0.80 for net proceeds
of $3,563,067. This issuance was contingent upon the signed share purchase
agreement with SES Switzerland.
As
of
September 27, 2006 SES Switzerland acquired all shares (10,668,000) of the
public shell in a reverse acquisition. The public shell had net assets of
$39,069 of which $164,234 was cash.
On
November 22, 2006 the Company issued 4,100,000 shares at $0.90 for gross
proceeds of $3,690,000, less finder’s fees of $369,001 pursuant to private
placement subscription agreements.
On
November 22, 2006, the Company issued warrants to purchase 1,500,000 shares
of
common stock at an exercise price of $0.90 per share (the “Warrant Shares”). The
Warrants expire four (4) years after the date of issuance.
During
the year ended December 31, 2007, no stock purchase warrants were
exercised.
Warrant
transactions consisted of the following during the year ended December 31,
2007:
|
|
Exercisable
|
|
|
|
|
|
Warrants
|
|
Strike
Price
|
|
Warrants
Outstanding As of December 31, 2006
|
|
|
0
|
|
$
|
0
|
|
Warrants
granted as consideration for agent’s fee
|
|
|
1,500,000
|
|
$
|
0.90
|
|
Exercise
of warrants
|
|
|
0
|
|
|
0
|
|
Warrants
Outstanding As of December 31, 2007
|
|
|
1,500,000
|
|
$
|
0.90
|
|
Warrants
outstanding expire as follows:
|
|
Warrants
|
|
Strike
|
|
Year
|
|
Expiring
|
|
Price
|
|
2010
|
|
|
1,500,000
|
|
$
|
0.90
|
|
|
|
|
1,500,000
|
|
|
|
|
The
Company granted registration rights to the finder (Lansing Securities) including
the right to include all or any part of the Warrant Shares (the “Registrable
Securities”) in the next registration statement and subsequent registration
statements that the Company files with the SEC from time to time (the
“Registration Statement”) (other than a registration statement on Form S-8 or
Form S-4) until all of the Registrable Securities have been duly
registered.
On
August
31, 2006, SES USA entered into an agreement with Standard Atlantic to advise
SES
USA and its stockholders in connection with the purchase of all of the shares
of
SES Switzerland.
Pursuant
to the terms of a Finder’s Agreement between SES USA and Standard Financial (the
“Finder’s Agreement”) the parties agreed to a finder’s fee of $228,000 if a
transaction were consummated. The Finder’s Agreement also provided that Standard
Atlantic would continue to provide consulting services to the Company for a
period of 24 months regarding investor relations matters for a monthly fee
of
$20,000. The two-year consulting fee was due and was paid to Standard Financial
at closing. The Company recorded the total amount as of December 31, 2007,
as
deferred expense and amortizes the amount over the 24 months of the consulting
agreement.
As
per
the terms of the Credit Line Escrow Agreement dated September 1, 2006 (as
amended), related to the reverse acquisition, the Company was required to obtain
additional financing in the amount of CHF12,000,000 before November 30, 2007
to
build the manufacturing plant in Plan-les-Ouates. Otherwise, 24,143,410 shares
of common stock escrowed by Christiane Ernè, Jean-Christophe Hadorn and
Claudia Rey will be cancelled. If the Company receives the necessary
financing, the escrowed shares are to be delivered to a subsequent escrow
pursuant to the Long Term Escrow Agreement dated September 1, 2006. The shares
of common stock of the Company held in escrow pursuant to the terms of the
Long-Term Escrow Agreement are to be delivered from escrow by the escrow agent
on the second anniversary of the closing of the share exchange agreement. As
of
September 18, 2007, the Company did obtain the necessary financing to satisfy
the Credit Line Escrow Agreement, thus the shares were transferred into the
Long
Term Escrow and are included in earnings per share.
15.
Employee
Benefit Plans:
SES
Switzerland’s employees are enrolled in a mandatory group pension plan with
Bâloise Assurances. The pension plan is a defined contribution plan, and
payments to the plan are made in equal parts by the employee (through
withholding) and the employer. Contributions are based on the age of the
employee and vary between 8% and 16%. Total amounts paid by the employer for
2007 were $8,137.
16.
Interest
Income and other:
Interest
income for the year ended December 31, 2007 was $177,650 as compared to $19,384
for the year ended December 31, 2006. The interest income earned in the year
ended December 31, 2007, was received from increase time deposits originated
by
additional funding received during the second semester of 2006.
17.
Income
Taxes:
The
Company’s tax basis for assets and liabilities is identical for the financial
statements and tax reporting. Accordingly, the only deferred tax portion is
the
benefit with respect to the net operating loss. The Company records a valuation
allowance to reduce the deferred tax asset to the amount that is estimated
to be
more likely than not to be realized.
|
|
December 31,
2007
|
|
December 31,
2006
|
|
|
|
$
|
|
$
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
|
Net
operating loss carry-forward
|
|
|
987,836
|
|
|
588,759
|
|
Less:
valuation allowance
|
|
|
(987,836
|
)
|
|
(588,759
|
)
|
Net
deferred tax assets
|
|
|
-
|
|
|
-
|
|
We
have
net losses for financial reporting purposes. Recognition of deferred tax assets
will require generation of future taxable income. There can be no assurance
that
we will generate sufficient taxable income in future years. Therefore, we
established a valuation allowance on net deferred tax assets of $987,836 as
of
December 31, 2007 and $588,759 as of December 31, 2006.
The
components of loss before income tax benefit are as follows:
|
|
For
the Years Ended
December
31,
|
|
|
|
2007
|
|
2006
|
|
|
|
$
|
|
$
|
|
United
States
|
|
|
0
|
|
|
0
|
|
Switzerland
|
|
|
(1,524,054
|
)
|
|
(1,239,507
|
)
|
|
|
|
(1,524,054
|
)
|
|
(1,239,507
|
)
|
As
of
December 31, 2007, we have net operating loss carryforwards for Swiss tax
purposes of $3,770,368, expiring at various times from years ending 2010 to
2013.
|
|
2007
|
|
|
|
$
|
|
2010
|
|
|
(501,396
|
)
|
2011
|
|
|
(505,411
|
)
|
2012
|
|
|
(1,239,507
|
)
|
2013
|
|
|
(1,524,054
|
)
|
Total
tax-deductible loss carry forward
|
|
|
(3,770,368
|
)
|
The
deferred tax asset is realizable as we anticipate sufficient taxable income
in
future years to realize the tax benefit with respect to the net operating
loss.
The
adoption of FIN 48,
Accounting for Uncertainty in Income Taxes,
has had
no impact on the reported carryforwards at December 31, 2007.
The
tax
provisions differ from the amount computed using the federal statutory income
tax rate as follows:
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
2006
|
|
|
|
$
|
|
$
|
|
Income
tax benefit at federal statutory rate
|
|
|
(518,178
|
)
|
|
(421,432
|
)
|
Foreign
tax rate differential
|
|
|
119,101
|
|
|
96,558
|
|
Increase
in valuation reserve
|
|
|
399,077
|
|
|
324,875
|
|
|
|
|
-
|
|
|
-
|
|
18.
Concentration
of Risk
SES
Switzerland is dependent on third-party equipment manufacturers, distributors
and dealers for all of its supply of photovoltaic cells and panel components.
For fiscal years 2007 and 2006, products purchased from SES Switzerland’s top
three suppliers accounted for 90% and 94% of total revenues, respectively.
The
Company is dependent on its ability to provide installations on a timely basis
and on favorable pricing terms. Although SES Switzerland tries to diversify
its
sources of supplies, its technology needs certain types of solar cells and
the
loss of certain principal suppliers, or the loss of one or more of certain
ongoing affinity relationships could have a strong material adverse effect
on
the Company.
The
Company’s future results could also be negatively impacted by the loss of
certain customers, or the loss of one or more of certain ongoing affinity
relationships.
19.
Reverse
Acquisition
SES
USA
entered into a share exchange agreement dated August 31, 2006 with SES
Switzerland and the stockholders of SES Switzerland. The share exchange
agreement contemplated SES USA acquiring all of the issued and outstanding
common shares of SES Switzerland in exchange for the issuance by SES USA of
48,286,817 common shares. All share information has been retroactively restated
to reflect the recapitalization in connection with the reverse takeover. See
also Note 1.
20.
Related
Party Transactions
During
2007, Jean-Christophe Hadorn, the CEO, and a stockholder of the Company,
invoiced CHF124,182 ($103,598) to SES Switzerland as a consultant, of which
CHF22,159 ($18,486) was outstanding at year-end.
As
of the
fiscal years ended 2007 and 2006, the Company has a receivable from its major
stockholder in the amount of $84,938 (CHF95,611) and $78,386 (CHF95,611),
respectively. These amounts relate to a project for a building of a controlling
stockholder.
On
December 20, 2006, SES Switzerland signed a construction loan with Ms. Christine
Erné, the Company’s principal stockholder, to enable SES Switzerland to commence
construction of a new manufacturing facility near Geneva, Switzerland during
2007. The construction loan is in the amount of CHF2,700,000 ($2,398,593).
The
Company will pay interest at the rate of 4.5% p.a. on used funds. The term
of
the loan is two years. The funds were to be disbursed as soon as construction
has begun; however another credit source has been used instead and the credit
loan has been cancelled as at November 26, 2007.
Flannel
Management sarl has a consulting agreement with SES Switzerland effective
October 1, 2006. Flannel Management sarl receives a monthly consulting fee
of
CHF20,000 ($16,685) (using exchange rate set forth in Note 3 to the Consolidated
Financial Statements hereto), resulting in CHF 240,000 ($200,217) for the year
2007 (CHF 60,000 or $47,914 for 2006). The contract is for a 10-year term and
if
earlier terminated, the Company nevertheless pays the consulting fees for the
remainder of the term. One of Flannel Management sarl’s consultants is Philippe
Crisafulli, the husband of Sandrine Crisafulli, Chief Financial Officer of
SES
USA and SES Switzerland.
SES
Switzerland has entered into an employment agreement with Daniel Erné effective
October 1, 2006. Mr. Erné receives an annual salary of CHF130,000 ($108,450) in
consideration of management services. Mr. Erné is the husband of Christiane Erné
and a director of SES USA and SES Switzerland.
Dr.
John
Veltheer, past president and chief executive officer of SES Solar Inc., loaned
an aggregate of $30,000 to SES USA’s predecessor in November 2005 pursuant to an
unsecured promissory note that was payable upon demand and matured in November
2006. SES USA has repaid in full the loan.
21.
Supplemental
Cash Flow Information
Cash
paid
for interest during fiscal years 2007 and 2006 totaled $116,212, and $56,757,
respectively.
In
fixed
assets a total amount of $3,167,499 have been capitalized but not paid as of
December 31, 2007. This amount is included in accounts payable as of year
end.
22.
Subsequent
Events
No
major
events have occurred since the closing of the accounts.
9,889,546
Shares
SES
SOLAR INC.
Common
Stock
Prospectus
December
4, 2008
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item
13.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth the costs and expenses payable by us in connection
with the issuance and distribution of the securities being registered hereunder.
No expenses shall be borne by the selling stockholders. All amounts shown are
estimates, except for the SEC registration fees.
Securities
and Exchange Commission registration fees
|
|
$
|
52.01
|
|
Blue
Sky fees
|
|
$
|
6,000.00
|
(1)
|
Printing
and engraving expenses
|
|
$
|
5,000.00
|
(1)
|
Accounting
fees and expenses
|
|
$
|
5,000.00
|
(1)
|
Legal
fees and expenses
|
|
$
|
10,000.00
|
(1)
|
Transfer
agent and registrar fees
|
|
$
|
2,000.00
|
(1)
|
Miscellaneous
|
|
$
|
1,000.00
|
(1)
|
Total
|
|
$
|
29,052.01
|
|
(1)
Estimate
Item
14.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section
145 of the Delaware General Corporation Law provides that a corporation may
indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with
any threatened, pending or completed actions, suits or proceedings in which
such
person is made a party by reason of such person being or having been a director,
officer, employee or agent to the Registrant. The Delaware General Corporation
Law provides that Section 145 is not exclusive of other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise. Article Ninth of the
Registrant’s Certificate of Incorporation provides for indemnification by the
Registrant of its directors, officers and employees to the fullest extent
permitted by the Delaware General Corporation Law.
Section
102(b)(7) of the Delaware General Corporation Law permits a corporation to
provide in its certificate of incorporation that a director of the corporation
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director’s duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. Our Articles of Incorporation provide for such
limitation of liability to the fullest extent permitted by the Delaware General
Corporation Law.
Item
15.
RECENT SALES OF UNREGISTERED SECURITIES
The
following sets forth certain information concerning securities which were sold
or issued by us during the last three fiscal years without registration under
the Securities Act and in reliance on exemptions from such
registration.
On
May
30, 2006, we issued an aggregate of 5,050,000 common shares to the following
three subscribers at an issue price of $0.20 per share for total proceeds of
$1,010,000 in accordance with the terms of three private placement agreements
dated May 30, 2006. We issued the common shares in reliance upon Regulation
S
and/or Section 4(2) of the Securities Act by issuing the common shares to non
U.S. persons (as that term is defined in Regulation S of the Securities Act)
in
an offshore transaction.
Name
of Stockholder
|
|
Number
of Common
Shares
Subscribed
|
Highland
Ventures Ltd.
|
|
1,800,000
|
Rollock
Capital Ltd.
|
|
1,700,000
|
Maxmiz
Consulting Ltd.
|
|
1,550,000
|
On
September 8, 2006, we issued an aggregate of 350,000 common shares to the
following four subscribers at an issue price of $0.80 per share for total
proceeds of $280,000 in accordance with the terms of four private placement
agreements dated September 8, 2006. We issued the common shares in reliance
upon
Rule 506 of Regulation D and/or Section 4(2) of the Securities Act to U.S.
investors, each of whom represented that they were accredited
investors.
Name
of Stockholder
|
|
Number
of Common
Shares
Subscribed
|
Kenneth
Sam
|
|
6,250
|
Kenneth
Silverman
|
|
31,250
|
Nite
Capital LP
|
|
187,500
|
Evolution
Master Fund Ltd.
|
|
125,000
|
On
September 8, 2006, we issued an aggregate of 4,626,350 common shares to the
following 15 subscribers at an issue price of $0.80 per share for total proceeds
of $3,701,080 in accordance with the terms of private placement agreements
dated
September 8, 2006. We issued the common shares in reliance upon Regulation
S
and/or Section 4(2) of the Securities Act by issuing the common shares to
non
U.S. persons (as that term is defined in Regulation S of the Securities Act)
in
an offshore transaction.
Name
of Stockholder
|
|
Number
of Common
Shares
Subscribed
|
Bank
Julius Baer and Co. Ltd., Zurich (U. Mettler/VP; W. Gunthard/AVP)
|
|
187,600
|
SG
Private Banking (Suisse) S.A.
|
|
3,512,500
|
Frederick
H. Drury
|
|
31,250
|
Craig
Ivany
|
|
12,500
|
Judson
Rich
|
|
5,000
|
Merle
Lelievre-Parsons
|
|
60,000
|
Charles
A. DePape
|
|
5,000
|
Randall
Shaw
|
|
10,000
|
Lee
Yule Investments
|
|
18,750
|
Neil
Cunningham
|
|
15,000
|
Tough
Equities Inc.
|
|
6,250
|
Grazia
Bernard
|
|
80,000
|
Dorothy
Cameron
|
|
120,000
|
ADFI
Holding Limited
|
|
375,000
|
Accelera
Private Equity Limited
|
|
187,500
|
In
connection with the closing of a share exchange agreement on September 27,
2006,
we issued an aggregate of 48,286,817 common shares to the following three
subscribers in consideration for common shares of Société d-Energie Solaire S.A.
We issued the common shares in reliance upon Regulation S and/or Section
4(2) of
the Securities Act by issuing the common shares to non U.S. persons (as that
term is defined in Regulation S of the Securities Act) in an offshore
transaction.
Name
of Stockholder
|
|
Number
of Common
Shares
Subscribed
|
Christiane
Erne
|
|
43,458,135
|
Jean-Christophe
Hadorn
|
|
2,414,341
|
Claudia
Rey
|
|
2,414,341
|
On
November 22, 2006, we issued an aggregate of 4,100,001 common shares to the
following three subscribers at an issue price of $0.90 per share for total
proceeds of $3,690,000 in accordance with the terms of three private placement
agreements dated November 22, 2006. We issued the common shares in reliance
upon
Regulation S and/or Section 4(2) of the Securities Act by issuing the common
shares to non-U.S. persons (as that term is defined in Regulation S of the
Securities Act) in an offshore transaction.
Name
of Stockholder
|
|
Number
of Common
Shares
Subscribed
|
SG
Private Banking (Suisse) S.A.
|
|
3,266,667
|
Rodric
Marketing Inc.
|
|
279,998
|
SIF
Investment Company Ltd.
|
|
555,556
|
On
November 22, 2006, we issued an aggregate of 1,500,000 common share purchase
warrants to Lansing Securities Corp. as a finder’s fee in connection with the
private placement agreements dated November 22, 2006. The common share purchase
warrants were issued in accordance with the terms of a private placement
agreement dated November 22, 2006. Each common share purchase warrant is
exercisable until November 22, 2008 at an exercise price of $0.90 per share.
We
issued the common share purchase warrants in reliance upon Regulation S and/or
Section 4(2) of the Securities Act by issuing the common shares to non-U.S.
persons (as that term is defined in Regulation S of the Securities Act) in
an
offshore transaction.
Item
16.
EXHIBITS and FINANCIAL STATEMENT SCHEDULES
Exhibits
Copies
of
the following documents are included as exhibits to this prospectus pursuant
to
Item 601 of Regulation S-K:
Exhibit
Number
|
|
Description
|
2.1
|
|
Share
Exchange Agreement dated August 31, 2006, among our company, Société
d’Energie Solaire and the shareholders of Société d’Energie Solaire
(incorporated by reference from our Form 8-K filed on September 1,
2006)
|
|
|
|
3.1
|
|
Articles
of Incorporation (incorporated by reference from our Schedule 14C
filed on
March 11, 2004)
|
|
|
|
3.2
|
|
Bylaws
(incorporated by reference from Schedule 14C filed on March 11, 2004)
|
|
|
|
3.3
|
|
Certificate
of Ownership (incorporated by reference from our Form 8-K filed on
June
21, 2006)
|
|
|
|
3.4
|
|
Certificate
of Ownership (incorporated by reference from our Form 8-K filed on
August
25, 2006)
|
|
|
|
|
|
Opinion
of Hogan & Hartson LLP
|
|
|
|
9.1
|
|
Voting
Trust Agreement dated September 12, 2005 between Christian Erné and
Claudia Rey (incorporated by reference from our Form 8-K/A filed
on
November 16, 2006)
|
|
|
|
9.2
|
|
Voting
Trust Agreement dated February 22, 2006 between Christiane Erné and
Jean-Christophe Hadorn (incorporated by reference from our Form 8-K/A
filed on November 16, 2006)
|
|
|
|
10.1
|
|
Credit
Line Escrow Agreement dated September 1, 2006, among SES Solar Inc.,
Christiane Erné, Jean- Christophe Hadorn, Claudia Rey and Clark Wilson LLP
(incorporated by reference from our Form 8-K filed on October 4,
2006)
|
|
|
|
10.2
|
|
Amendment
to Credit Line Escrow Agreement dated November 30, 2006, among SES
Solar
Inc., Christiane Erné, Jean- Christophe Hadorn, Claudia Rey and Clark
Wilson LLP (incorporated by reference from our Form SB-2 filed on
November
9, 2007)
|
|
|
|
10.3
|
|
Long-Term
Escrow Agreement dated September 1, 2006, among SES Solar Inc., Christiane
Erné, Jean- Christophe Hadorn, Claudia Rey and Clark Wilson LLP
(incorporated by reference from our Form 8-K filed on October 4,
2006)
|
|
|
|
10.4
|
|
Employment
Agreement dated September 14, 2006 between Société d’Energie Solaire S.A.
and Sandrine Crisafulli (incorporated by reference from our Form
8-K filed
on October 4, 2006)
|
|
|
|
10.5
|
|
Consulting
Agreement dated October 3, 2006, as amended February 16, 2007, between
Daniel Erné and SES Société d’Energie Solaire S.A. (incorporated by
reference from our Form SB-2 filed on November 9, 2007)
|
|
|
|
10.6
|
|
Consulting
Agreement dated January 16, 2005 between Jean-Christophe Hadorn and
SES
Société d’Energie Solaire S.A. (incorporated by reference from our Form
8-K/A filed on November 16, 2006)
|
_____________
+
Filed herewith.
Exhibit
Number
|
|
Description
|
10.7
|
|
Consulting
Agreement
dated October 1, 2006 between SES Société d’Energie Solaire S.A. and
Flannel Management Sàrl (incorporated by reference from our Annual Report
on Form 10-KSB filed on March 26, 2008)
|
|
|
|
10.8
|
|
Loan
Agreement dated September 18, 2007 between SES Société d’Energie Solaire
S.A. and Etat de Genève, Department of Territory (DT), Cantonal Energy
Service (ScanE) (incorporated by reference from our Quarterly Report
on
Form 10-QSB filed on October 23, 2007)
|
|
|
|
10.9
|
|
Amended
Credit Line Agreement dated January 31, 2008 between SES Société d’Energie
Solaire S.A. and UBS SA (incorporated by reference from our Annual
Report
on Form 10-KSB filed on March 26, 2008)
|
|
|
|
10.10
|
|
Construction
Credit Agreement dated December 20, 2006, as amended November 13,
2007,
between SES Société d’Energie Solaire S.A. and Banque Cantonale de Genève
(incorporated by reference from our Current Report on Form 8-K filed
on
November 16, 2007)
|
|
|
|
10.11
|
|
Form
of Share Purchase Warrants and Warrant Agreement between SES Solar
Inc.
and Lansing Securities Corp. (incorporated by reference from our
Form SB-2
filed on December 21, 2007)
|
|
|
|
10.12
|
|
Finder’s
Fee Agreement dated August 31, 2006 between SES Solar Inc. and
Standard Atlantic (Suisse) S.A. (incorporated by reference from our
Current Report on Form 8-K filed on October 4, 2006)
|
|
|
|
|
|
Subsidiaries
of SES Solar Inc.
|
|
|
|
23.1
+
|
|
Consent
of BDO Visura,
Independent
Registered Public Accounting Firm
|
|
|
|
23.2
|
|
Consent
of Hogan & Hartson LLP (included in exhibit 5.1)
|
_____________
+
Filed herewith.
Item
17.
UNDERTAKINGS
The
undersigned company hereby undertakes that it will:
(1)
file,
during any period in which offers or sells securities, a post-effective
amendment to this registration statement to:
(a)
include
any prospectus required by Section 10(a)(3) of the Securities Act;
(b)
reflect
in the prospectus any facts or events which, individually or together, represent
a fundamental change in the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the aggregate
offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement; and
(c)
include
any additional or changed material information on the plan of distribution
not
previously disclosed in the registration statement;
(2)
for
determining any liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering;
and
(3)
file
a
post-effective amendment to remove from registration any of the securities
that
remain unsold at the end of the offering.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of our company pursuant
to the foregoing provisions, or otherwise, our company has been advised that
in
the opinion of the Securities and Exchange Commission that type of
indemnification is against public policy as expressed in the Securities Act
and
is, therefore, unenforceable. In the event that a claim for indemnification
against said liabilities (other than the payment by our company of expenses
incurred or paid by a director, officer or controlling person of our company
in
the successful defense of any action, suit or proceeding) is asserted by the
director, officer or controlling person in connection with the securities being
registered, our company will, unless in the opinion of our counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of the issue.
For
determining liability under the Securities Act, treat the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act
as part of this registration statement as of the time the Securities and
Exchange Commission declared it effective.
For
the
purpose of determining liability under the Securities Act to any purchaser,
each
prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule
430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed
to be
part of and included in the registration statement as of the date it is first
used after effectiveness.
Provided
,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of
the
registration statement or made in any such document immediately prior to such
date of first use.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Plans-les-Ouates,
Geneva,
Switzerland on
December
4,
2008.
|
SES
SOLAR INC.
|
|
|
|
/s/
Jean-Christophe Hadorn
|
|
By:
|
Jean-Christophe Hadorn
|
|
Title:
|
President and Chief Executive Officer
|
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities indicated on
December
4,
2008.
Signatures:
/s/
Jean-Christophe
|
|
Jean-Christophe
Hadorn
|
|
President,
Chief Executive Officer and Director
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
Sandrine
Crisafulli
|
|
Chief
Financial Officer and Chief Operating Officer
|
|
(Principal
Accounting Officer and Principal Financial Officer)
|
|
|
|
|
|
Daniel
Erné
|
|
Director
|
|
|
|
|
|
Christiane
Erné
|
|
Director
|
|
|
|
|
|
Michael
D. Noonan
|
|
Director
|
|
*
Pursuant to Power of Attorney
By:
/s/ Jean-Christophe Hadorn
Jean-Christophe
Hadorn
|
Attorney-in-fact
|
EXHIBIT
INDEX
Exhibit
Number
|
|
Description
|
2.1
|
|
Share
Exchange Agreement dated August 31, 2006, among our company, Société
d’Energie Solaire and the shareholders of Société d’Energie Solaire
(incorporated by reference from our Form 8-K filed on September 1,
2006)
|
|
|
|
3.1
|
|
Articles
of Incorporation (incorporated by reference from our Schedule 14C
filed on
March 11, 2004)
|
|
|
|
3.2
|
|
Bylaws
(incorporated by reference from Schedule 14C filed on March 11, 2004)
|
|
|
|
3.3
|
|
Certificate
of Ownership (incorporated by reference from our Form 8-K filed on
June
21, 2006)
|
|
|
|
3.4
|
|
Certificate
of Ownership (incorporated by reference from our Form 8-K filed on
August
25, 2006)
|
|
|
|
|
|
Opinion
of Hogan & Hartson LLP
|
|
|
|
9.1
|
|
Voting
Trust Agreement dated September 12, 2005 between Christiane Erné and
Claudia Rey (incorporated by reference from our Form 8-K/A filed
on
November 16, 2006)
|
|
|
|
9.2
|
|
Voting
Trust Agreement dated February 22, 2006 between Christiane Erné and
Jean-Christophe Hadorn (incorporated by reference from our Form 8-K/A
filed on November 16, 2006)
|
|
|
|
10.1
|
|
Credit
Line Escrow Agreement dated September 1, 2006, among SES Solar Inc.,
Christiane Erné, Jean- Christophe Hadorn, Claudia Rey and Clark Wilson LLP
(incorporated by reference from our Form 8-K filed on October 4,
2006)
|
|
|
|
10.2
|
|
Amendment
to Credit Line Escrow Agreement dated November 30, 2006, among SES
Solar
Inc., Christiane Erné, Jean- Christophe Hadorn, Claudia Rey and Clark
Wilson LLP (incorporated by reference from our Form SB-2 filed on
November
9, 2007)
|
|
|
|
10.3
|
|
Long-Term
Escrow Agreement dated September 1, 2006, among SES Solar Inc., Christiane
Erné, Jean- Christophe Hadorn, Claudia Rey and Clark Wilson LLP
(incorporated by reference from our Form 8-K filed on October 4,
2006)
|
|
|
|
10.4
|
|
Employment
Agreement dated September 14, 2006 between Société d’Energie Solaire S.A.
and Sandrine Crisafulli (incorporated by reference from our Form
8-K filed
on October 4, 2006)
|
|
|
|
10.5
|
|
Consulting
Agreement dated October 3, 2006, as amended February 16, 2007, between
Daniel Erné and SES Société d’Energie Solaire S.A. (incorporated by
reference from our Form SB-2 filed on November 9, 2007)
|
|
|
|
10.6
|
|
Consulting
Agreement dated January 16, 2005 between Jean-Christophe Hadorn and
SES
Société d’Energie Solaire S.A. (incorporated by reference from our Form
8-K/A filed on November 16, 2006)
|
|
|
|
10.7
|
|
Consulting
Agreement dated October 1, 2006 between SES Société d’Energie Solaire S.A.
and Flannel Management Sàrl (incorporated by reference from our Annual
Report on Form 10-KSB filed on March 26,
2008)
|
_____________
+
Filed herewith.
Exhibit
Number
|
|
Description
|
10.8
|
|
Loan
Agreement dated September 18, 2007 between SES Société d’Energie Solaire
S.A. and Etat de Genève, Department of Territory (DT), Cantonal Energy
Service (ScanE) (incorporated by reference from our Quarterly Report
on
Form 10-QSB filed on October 23, 2007)
|
|
|
|
10.9
|
|
Amended
Credit Line Agreement dated January 31, 2008 between SES Société d’Energie
Solaire S.A. and UBS SA (incorporated by reference from our Annual
Report
on Form 10-KSB filed on March 26, 2008)
|
|
|
|
10.10
|
|
Construction
Credit Agreement dated December 20, 2006, as amended November 13,
2007,
between SES Société d’Energie Solaire S.A. and Banque Cantonale de Genève
(incorporated by reference from our Current Report on Form 8-K filed
on
November 16, 2007)
|
|
|
|
10.11
|
|
Form
of Share Purchase Warrants and Warrant Agreement between SES Solar
Inc.
and Lansing Securities Corp. (incorporated by reference from our
Form SB-2
filed on December 21, 2007)
|
|
|
|
10.12
|
|
Finder’s
Fee Agreement dated August 31, 2006 between SES Solar Inc. and
Standard Atlantic (Suisse) S.A. (incorporated by reference from our
Current Report on Form 8-K filed on October 4, 2006)
|
|
|
|
|
|
Subsidiaries
of SES Solar Inc.
|
|
|
|
23.1
+
|
|
Consent
of BDO Visura,
Independent
Registered Public Accounting Firm
|
|
|
|
23.2
|
|
Consent
of Hogan & Hartson LLP (included in exhibit 5.1)
|
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