Green Stream Holdings Inc. (the “Company”)
is a provider of next-generation solar energy solutions to underrepresented and/or growing market segments. The Company is currently targeting
high-growth solar market segments for its advanced solar power generation systems (“solar systems”), operating in multiple
markets and is prepared for conducting business in several industry-friendly locations including California, Nevada, Arizona, Washington,
New York, New Jersey, Massachusetts, New Mexico, Colorado, Hawaii, and Canada. Our business office is located at 201 E. Fifth Street,
Suite 100, Sheridan, Wyoming 82801.
The Company was originally incorporated on April
12, 2004, in the State of Nevada under the name of Ford-Spoleti Holdings, Inc. On June 4, 2009, the Company merged with Eagle Oil Holding
Company, a Nevada corporation, and the surviving entity, the Company, changed its name to “Eagle Oil Holding Company, Inc.”
On April 25, 2019, the Company entered into an Acquisition and Merger Agreement between the Company and Green Stream Finance, Inc., and
following the merger contemplated by such agreement the Company commenced its current operations (the “Reorganization”) and
changed its name to “Green Stream Holdings Inc.” Effective September 25, 2019, the Company elected to convert the Company
from Nevada corporation to Wyoming corporation. On December 13, 2019, the Company amended its articles of incorporation to increase its
authorized capital stock to 10,000,000,000 shares of common stock, par value of $0.001 per share and 12,000,000 shares shall be shares
of preferred stock, par value of $0.001 per share.
The Company’s common stock is currently
quoted on the OTC Markets under the symbol “GSFI.”.
Recent Developments
On December 28, 2020, the Company’s Board
of Directors unanimously elected to remove Richard Rogers as a member of the Board of Directors.
On November 9, 2020, the Company was advised that
Madeleine Cammarata had assigned the 600,000 shares of the Registrant’s Series B Preferred Stock (the “Shares”) to We
Work Revocable Trust in connection with Ms. Cammarata’s succession plan due to her compromised health conditions. The assignment
of the Shares, which have the right to vote in the aggregate, on all shareholder matters, votes equal to 99% of the total shareholder
vote on any and all matters which shareholder have the right to vote on, represented a change in control of the Company.
Also on November 9, 2020, Ms. Cammarata resigned
as a member of the Board of Directors and as the Company’s Chief Executive Officer. In connection with her resignation, the Company
appointed Eric Fain as a member of the Board of Directors and as Interim Chief Executive Officer. The Company was advised that Ms. Cammarata
subsequently passed away.
On January 28, 2021, Eric Fain resigned as a member
of the Board of Directors and as the Registrant’s Interim Chief Executive Officer. To fill the vacancy resulting in Mr. Fain’s
resignation, the Registrant’s Board of Directors appointed James C. DiPrima as a member of the Board of Directors and as Chief Executive
Officer.
On February 16, 2021, the Company repaid its Convertible
Promissory Notes in favor of Geneva Roth Remark Holdings, Inc., dated October 8, 2020, December 22, 2020 and January 11, 2021, for $181,
923.63 in full satisfaction of these notes, so that the Company has no further obligations to pay, issue securities to, or otherwise with
respect to Geneva Roth Remark Holdings, Inc. under these notes.
On February 18, 2021, the Company repaid its Convertible
Promissory Note in principal amount of $100,000 in favor of EMA Financial, LLC, dated November 5, 2020, for $133,775.34 in full satisfaction
of this note, so that the Company has no further obligations to pay, issue securities to, or otherwise with respect to EMA Financial,
LLC under this note.
On February 24, 2021, the Company repaid its Convertible
Promissory Note in principal amount of $100,000 in favor of Quick Capital, LLC, dated September 22, 2020, for $106,000, plus a prepayment
fee of $27,200 and an additional $20,000, or a total of $147,200 in full satisfaction of this note, so the Company has no further obligations
to pay, issue securities to, or otherwise with respect to Quick Capital, LLC under this note.
Business Overview
Green Stream Finance, Inc., a Wyoming corporation
was incorporated in 2016, and has offices in New York City. The Company is focused on providing access to solar energy to energy consumers.
The Company is currently operating in multiple markets and is prepared for conducting business in several industry-friendly locations
including California, Nevada, Arizona, Washington, New York, New Jersey, Massachusetts, New Mexico, Colorado, Hawaii, and Canada.
Green Stream Finance, Inc. is a marketer and contractor
of solar systems to underrepresented and/or growing market segments to homeowners, landowners, commercial building owners in the United
States.
Since the Reorganization, the Company has been
involved primarily in organizational activities as a marketer of solar systems. The Company has not yet generated any revenues from these
activities. The Company has developed relationships with selective world-class designers and manufacturers of solar power solutions, such
as the famed architect Anthony Morali of Renewable Energy Development LLC (“RED”), a leading expert in solar infrastructure
design. The Company hopes to leverage these relationships to offer the unique solar energy solutions provided by RED and others to the
Company’s customers. The Company currently has no manufacturing or installation capabilities and will rely upon third-parties like
RED to design, manufacture, and install our solar systems.
The Company will be relying on both Renewable Energy Development (RED)
and Amergy Solar for the development, design and construction of its projects. The Company anticipates retaining RED for solar designs
and the local building and electrical permitting where geographically permissible. As set forth in the Letter Agreement, the Company will
use Amergy Solar to provide the engineering, procurement and construction work for the projects indicated in the letter agreement and
the Registration Statement including the New York State Energy Research and Development and utility interconnection applications.
It is anticipated that when projects commence, both RED and Amergy
will each be paid an initial payment upon execution of an agreement for a particular project. It is also expected that both RED and Amergy
will be paid on a project-by-project basis in installments as they complete various phases of the project and reach applicable milestones
within respective agreements.
For example, we anticipate paying Amergy an initial payment of $25,000
when we enter into an agreement for a specific project and then an additional installment of approximately $65,000 for materials and to
begin mobilization. As with any construction job, other amounts will be required to be paid based on the size and complexity of the project.
Similarly, the amounts we anticipate having to pay RED will likely change on a project by project basis based on the size and wattage
of the particular project.
However, we have not yet entered into any specific agreements for projects
with either RED or Amergy and we therefore cannot predict exactly what such terms will be.
Solar Systems
The Company intends to generate initial revenue
by arranging for the design, installation, operation, maintenance, repair and replacement of solar systems on the top of buildings pursuant
to leases it has entered into with the owners of these properties, which leases are discussed in “Plan of Operations” (the
Solar Leases). We currently rely on RED and other vendors for the design, manufacture and installation of the solar systems we market
and sell. These vendors will be paid on a project by project basis for the design, materials, manufacturing and installation of each solar
system. We will be required to pay for the products and services needed to build these systems before their completion and before these
systems will be able to produce electricity, and before we will be able to generate revenues from the sale of that electricity to electric
utility companies or customers. Once these solar systems have commenced operations, and depending on the regulatory regime, electric utility
policies and other circumstances of the areas in which a solar system is built, the Company will then market net metering agreements under
which the electricity generated by the system is sold to the customer’s local utility company.
Community Solar
“Community Solar” is a collection
of solar panels in a publicly shared space that generates electricity from the sun.
These panels are placed near homes and in neighborhoods
where they can provide maximum benefit to people who typically may not have the ability to use solar power.
We endeavor to make the move to solar energy simple
for our customers by identifying quality product manufacturers and installers and arranging the financing, design, permitting, construction
and maintenance of our energy solutions. We work with a group of contractors who design, procure, permit, install, and interconnect a
suitable solar energy solution to the utility grid, simplifying the installation of solar systems. Although we have engaged third-party
manufacturers for production and distribution logistics, we will be the party who communicates with the customers throughout the entire
period of services of our energy solutions.
The Company’s strategy to increase sales
will be to offer fundamentally unique solar power systems, including those designed by RED or other comparable designers, and to introduce
a highly customizable and personalized approach to after-sales customer service through a unique type of contractual relationship with
its customers.
During the next six months it is the Company’s
plan to:
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Raise capital to build more solar systems and increase its marketing of Community Solar projects. |
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Initiate aggressive online and offline marketing campaigns to build our brand, market awareness, and recognition. |
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Increase sales via increased advertising and marketing campaigns. |
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Hire additional key employees to help strengthen the Company. |
We plan to work with (i) private homeowners,
(ii) local roofing companies, (iii) solar installation companies, (iv) custom homebuilders, (v) mass-market homebuilders and (vi) and
commercial building and multi-unit residential owners. Our target market is commercial building and property owners in New York and New
Jersey. To date, we currently have four (4) Solar Leases with commercial property owners in New York and New Jersey, and, assuming we
are able to obtain adequate financing, we expect to complete these systems. As of the date of this registration statement, the Company
was actively seeking to develop the following four (4) leases: 111 Station Road, Bellport, New York; 607 Station Road, Bellport, New
York; and 8012 Tonneli Ave, North Bergen, New Jersey.
Description of Products and Services
Green Stream endeavors to provide solar energy
solutions to underrepresented and/or growing market segments that seek renewable energy solutions but don’t have direct access to
them. We plan to first develop solar power generation systems (“solar systems”) at the locations that are the subject of the
Solar Leases, and then market net metering agreements or community solar solutions to customers nearby, depending on the regulatory regime,
electric utility policies and other circumstances of the areas in which a solar system is built.
The Company believes that its revenues in key
regions will be derived directly from agreements that lease solar systems that we arrange the building of to our customers. Pursuant to
these agreements, the Company, owns, operates, and maintains the solar system, and a host customer agrees to site the system on its property.
The Company will then attempt to enter into net metering agreements to sell electric output from the solar services provider for a predetermined
period (usually twenty-five years) to the host’s local utility. This financial arrangement allows the host customer to receive stable
and low-cost electricity, while the solar services provider or another party acquires valuable financial benefits, such as tax credits
and income generated from the sale of electricity. The Company would be responsible for the development, design, and the administration
of the project, obtaining permits, financing, and managing the solar system, and well as its installation and maintenance.
The Company does not expect to enter into agreements
for the design, construction or installation of any solar facilities until it has obtained all necessary approvals for the installation
of the system from local authorities and entered into a net metering agreement with the applicable utility. Moreover, pursuant to the
terms of the Company’s existing leases, the Company is similarly not required to pay rent to the owner until it begins generating
revenue through a net metering agreement. If, however, the Company commences, or engages a contractor to commence, the development, construction
or installation of a solar system prior to entering into a net metering agreement, there can be no assurance that the Company will be
successful in entering into a net metering agreement following the facility’s completion and the Company may be required to seek
alternative means to recoup the investment in the facility, such as a purchase power agreement, for example, of which there can be no
assurance that the Company will be able to find such an arrangement or find one on terms that are favorable to the Company.
An interconnection agreement is generally required
from the applicable local electricity utility to interconnect a solar energy system with the utility grid. In almost all cases, interconnection
agreements are standard form agreements that have been pre-approved by the local public utility commission or other regulatory body with
jurisdiction over interconnection. As such, no additional regulatory approvals are required once interconnection agreements are signed.
We would prepare and submit these agreements on behalf of our customers to ensure compliance with interconnection rules. Under this business
model, the host customer buys the services produced by our solar energy solutions rather than the solution itself.
We expect to function as the project coordinator,
arranging the financing, design, permitting, and construction of the system. We plan to purchase the solar panels for the project from
a PV manufacturer, who provides warranties for system equipment. The installers we initially plan to contract with will design the system,
specify the appropriate system components, and may perform the follow-up maintenance over the life of the PV system. Although we may
eventually develop an in-house team of installers, we currently do not have such a team. Once the construction agreement is signed, a
typical installation is expected to be completed in three to six months.
Typical Project Timeline
We plan to offer investors the right to
invest in the equity of specific projects and assign such investors federal and state tax benefits for which the system is eligible.
For example, we expect to eventually form special purpose entities for each project with such equity investors to receive and distribute
payments to the investors resulting from the system’s output and related tax benefits. The utility serving the host customer would
provide an interconnection from the PV system to the grid and continue its electric service with the host customer to cover the periods
during which the system is producing less than the host’s electric demand. Certain states have net metering requirements in place
that provide a method of crediting customers who produce electricity on-site in excess of their own electricity consumption. In most
states, the utility will credit excess electricity generated from the PV system, although the compensation varies significantly depending
on state policies.
The Company plans to receive income from the sales
of unused electricity to the applicable electric utility on a monthly basis, and the tax credits and incentives assigned to the Company
(or the special purpose vehicle for the project). Typically, our solar power solutions are expected to produce enough energy to not only
sufficiently supply the buildings but additionally to save and store enough energy to sell to utility companies. The Company is principally
targeting the commercial solar space, a market space that provides significant and longer-term cash-producing assets.
Some of our projects will be dependent upon favorable
tax treatment and incentives from state, local and federal sources. Should there be a decline in this type of government support it could
affect our profits or make the use of our solar systems less desirable or cost effective. See Government Incentives and Policies,
below.
Community Solar
Electricity generation in the U.S. is progressing
to a renewable market. Solar energy is on the rise due to state and federal government tax incentives, ease of operation and maintenance,
and declining costs. The economy is creating a market for renewable energy that helps conserve our natural resources and clean energy
that reduce the long-standing harmful environmental effects of coal and oil.
The renewable energy market is growing with federal
and particularly state, regulations passing and implementing bills around the nation for more renewable sources. California is taking
the lead on sustainable energy with their passing of a Senate Bill (SB 350) that requires 50% of electricity to come from renewable sources
by 2030. The enactment of SB 350 encourages the procurement of electricity from renewable sources, providing a market for solar systems
in California.
Demand for photovoltaic (“PV”) solar
power in the U.S. has grown significantly over the last few years and is projected by the Solar Energy Industries Association (“SEIA”)
to continue growing rapidly. According to SEIA, from 2007 through 2017, the U.S. Solar market grew at an average annual rate of 59 percent.
SEIA had projected a compound annual growth rate of 28 percent between 2012 and 2016. There were 10,608 MW installed in 2017 and in 2017
solar accounted for 30% of all new electric generating capacity installed.
For all of 2017, non-residential PV was the only
segment expected to grow on an annual basis. The segment’s growth comes from projects rushing to install before rate and incentive
structures change in select markets, along with the continued emergence of business and community solar, which is on track to grow by
more than 50% year-over-year. According to market segment data from SEIA, installed capacity of utility-scale PV projects grew from 58
MW in 2009 to 53 GW at the end of 2017. Utility-scale solar (plants with a capacity of at least one megawatt) comprise about 2% of all
utility-scale electric generating capacity and 0.9 % of utility-scale generation. The first utility-scale solar plants were installed
in the mid-1980s, but more than half of the currently operating utility-scale solar capacity came online since 2015.
Community solar energy incentives coupled with
exorbitant electricity costs have generated a rapidly growing community solar market. The Company is targeting multiple high revenue verticals
within the expanding solar energy markets, including but not limited to the rapidly increasing community solar space. For instance, in
New York City, where building owners pay some of the highest electricity prices, the Company hopes to rent 50,000 to 100,000 square feet
of rooftop space in the near future and to contract with vendors to install solar systems providing the option of renewable solar power
to local customers.
Plan of Operation
The Company plans to continue to marketing its
renewable energy generation systems, focusing on solar resources, as a replacement of fossil fuel energy generation equipment. The Company
intends to do this by serving as the administrator of solar system installations to be provided by the Company’s vendors, and a
coordinating agent for leasing arrangements relating to those systems. In the next twelve months we intend to focus on projects in the
$50,000 to $5,000,000 range. GSFI will provide financing for those projects through investment of its own funds, management of project-specific
investor funds, and leasing of solar energy equipment and components. As of the date of this registration statement, we have entered into
four (4) active Solar Roof Leases in the New York and New Jersey metropolitan area, each for a term of twenty-five (25) years at $2,000
per month with annual increases of 2%. As of the date of this registration statement, the Company was actively seeking to develop solar
systems at the locations subject to all four (4) of those leases. The leases will not commence until the Company has arranged for the
commencement of construction of a solar system at the site. The construction of each solar system will cost the Company approximately
$60,000 to $2,000,000 to build depending on the specifications of the system and any applicable tax credits. The property owner does not
have the option to purchase the equipment following the termination or expiration of the lease and it will remain the property of the
Company.
Pursuant to the terms of the Solar Leases,
the Company agreed to lease space from each of the property owners for the siting, installation, inspection, operation, maintenance, and
repair of solar systems on each of the sites. Each lease is for a term of twenty-five (25) years for a monthly rental amount of $2,000
payable upon commencement of net metering of commercial revenue generation. The leases are not automatically renewable by either party.
None of the Solar Leases provide a deadline for completion of, or a penalty for failure to build an operational solar system at the locations
subject to the Solar Leases. Once a solar system has become operational at a Solar Lease location, the Company will receive payment from
the sale of the electricity it generates to the local electric utility, and any corresponding tax credits and other incentives. The Company
may then also enter a PPA with the lessor of the location in order to sell electricity generated by the system to the lessor, or make
electricity from the system available to the many potential customers of a community solar project. The Company is responsible for
developing, installing and designing each solar facility and is the owner of the solar equipment. The Company has the right to terminate
the Lease at any time without notice to the property owner. Following the expiration or termination of the lease, the Company will be
required to decommission, dismantle and remove the solar system and all other installations and to return the property to its condition
before the commencement of the lease.
Timetable for Solar System Installations
| Project |
Anticipated Completion Date |
Anticipated Cost |
Anticipated Developer |
| 8012 Tonneli Ave, N. Bergen, NJ |
March 2022 |
Pending** |
Amergy |
| 11 Station Road, Bellport, NY |
April 2022 |
Pending** |
Amergy |
| 607 Station Road Bellport NY |
May 2022 |
Pending** |
Amergy |
| 747 Main Street, New Rochelle, NY |
May 2022 |
Pending** |
Amergy |
* Reflects estimates based on future conditions. Actual dates,
costs and related may vary.
** Pending: the Company has not yet fully/sufficiently evaluated
the project to make an estimate.
If the Company is able to raise sufficient funds,
it hopes to enter into larger leases for larger projects to increase its revenue streams. We currently lack the funding to begin and complete
the construction of one or all of these projects. To effectively fund our business plan, we will need to raise additional capital and/or
obtain vendor financing for the equipment we intend to purchase. We have historically raised operating capital through the sale of our
securities or debt. However, there can be no assurance that the Company will be able to raise sufficient capital on terms acceptable to
the Company to complete any or all of these projects.
During the third quarter of 2021, we will require
approximately $5 million for the design, construction and installment of the Company’s first four solar facility projects.
During the third quarter of 2021, providing the
Company can complete one or more solar systems at locations under the Solar Leases, the Company expects to commence revenue generating
operations. If four or more such solar systems are operational, it is anticipated that revenues from the resale of electricity to the
applicable utilities will generate approximately $50,000 to $60,000 per quarter based on our projections of the amount of power these
systems will generate, and the current amounts the applicable electric utilities will pay for electricity generated using solar power.
Thereafter, in the first quarter of 2022, providing
the Company has generated revenue generating operations, the Company anticipates it will be profitable within the quarter. The Company
will continue to seek additional candidates for leases of the solar systems it markets and intends to sell and anticipates it will be
required to raise additional capital through the sale of its securities or debt. However, there can be no assurance that the Company will
be able to raise these funds or that it will be able to do so on terms that are favorable to the Company.
In the second quarter of 2022, providing the
Company has commenced revenue generating operations, the Company anticipates it will be profitable within the quarter. The Company will
continue to secure permits for the leasing candidates acquired in the previous quarters as well as seek additional candidates for leases
of the solar systems it markets and intends to sell. The Company anticipates it will be required to raise additional capital through
the sale of its securities or debt. However, there can be no assurance that the Company will be able to raise these funds or that it
will be able to do so on terms that are favorable to the Company.
Anticipated Milestones
The Company anticipates completing projects it
has already started, and potentially expand with new leases and projects, possibly in new states, as described in the table below.
| Milestone |
Anticipated Commencement Date |
Completion Date |
Categories of Expenditures |
| 8012 Tonneli Ave, N. Bergen NJ |
November 2021 |
March 2022 |
Contractors, equipment, transportation, developer |
| 11 Station Road Bellport NY |
December 2021 |
April 2022 |
Contractors, equipment, transportation, developer |
| 607 Station Road Bellport NY |
January 2022 |
May 2022 |
Contractors, equipment, transportation, developer |
| 747 Main Street, New Rochelle NY |
January 2022 |
May 2022 |
Contractors, equipment, transportation, developer |
| Expansion New State |
Efforts Expected to Start 3rd Quarter 2021 |
Third Quarter 2022 |
Marketing, Travel, Consultants, |
| Expansion 2nd New State |
Efforts Expected to Start 4th Quarter 2021 |
Fourth Quarter 2022 |
Marketing, Travel, Consultants, |
The amounts that we actually spend for any specific purpose may vary
significantly, and will depend on a number of factors including, but not limited to, the pace of the completion of each solar system,
conditions in the markets for the services required to complete solar systems, changes in or revisions to our marketing strategies, as
well as any applicable legal or regulatory changes which may occur.
If we are unable to raise the net proceeds from
our Regulation A Offering or other financing activities that we believe are needed to fund our business plan, we may be required to scale
back our development plans by reducing expenditures for employees, consultants, business development and marketing efforts, and other
envisioned expenditures. This could reduce our ability to complete existing solar system projects or initiate new ones, or require us
to seek further funding earlier, or on less favorable terms, than if we had raised the full amount of the offering.
If management is unable to implement its proposed
business plan or employ alternative financing strategies, it does not presently have any alternative proposals.
We cannot assure you that our solar systems will
be completed in a timely manner or at all, that we will ever earn revenues sufficient to support our operations or that we will ever be
profitable. Furthermore, since we have no committed source of financing, we cannot assure you that we will be able to raise money as and
when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail,
or even to cease our operations.
Liquidity and Capital Resources.
At April 30, 2021, the Company had $69,081 of
cash and net working capital was ($736,924) as compared with $14,727 in cash and net working capital of ($577,062) at April 30, 2020 an
increase of ($159,862).
In 2021, funds used by the net loss of ($3,892,896)
included: expenditures for legal and professional fees. Funds were provided by the sale of the Company’s equity and debt securities.
The Company needs to obtain capital; however, no assurance can be given that it will be able to obtain this capital on acceptable terms,
if at all. In such an event, this may have a materially adverse effect on the Company’s business, operating results and financial
condition. If the need arises, the Company may attempt to obtain funding or pay expenses through the continued sale or issuance of restricted
stock. The Company may also use various types of short term funding, related party advances and expenses payment deferrals and external
loans. The Company’s auditors have issued a going concern opinion.
Management is actively exploring additional
required funding through debt or equity financing pursuant to its plan. There is no assurance that we will be successful in obtaining
sufficient financing on terms acceptable to us to fund continuing operations. Management believes that the results of the management plan,
the Company’s existing resources and access to the capital markets will permit us to fund planned operations and expenditures. We
believe that we will need to raise additional capital by way of equity, debt, debentures, or other methods, to support our anticipated
operational expenses. Management is cautiously optimistic, however, that it will be able to generate the funding required to fund operations
through the end of the year. However, there can be no assurance that the Company will be able to raise sufficient capital on terms acceptable
to the Company to complete any or all of these projects.
Key Suppliers and Contractors
We have established a relationship with Renewable
Energy Development LLC (“RED”), headed by Anthony Morali of Morali Architects, and plan to work with RED to design, manufacture,
and install the solar panels and complete other relevant services needed to complete our solar systems. RED is an independent contractors
who performs services when requested by the Company. The loss of any of our vendors, and particularly RED, since we are marketing the
solutions and designs it provides, would have serious negative effects on our business, since it would take time for us to establish relationships
with new contractors and suppliers with similar expertise.
Competition
Although many small and medium-sized companies
are still in the process of understanding how solar energy can make sense for them, more than 100 of the Fortune 500 companies have already
received significant results by using solar power.
Nevertheless, we believe our primary competitors
are the traditional local utilities that supply energy to our potential customers. We compete with these traditional utilities primarily
based on price, predictability of price and the ease by which customers can switch to electricity generated by our solar energy systems
rather than fossil-based alternatives. We believe that our pricing and focus on customer relationships allow us to compete favorably with
traditional utilities in the regions we service.
Other sources of competition are other solar energy
system providers such as Tesla, Inc., Vivint Solar Inc., Sunrun Inc., Sungevity, Inc., Tiger Reef, Inc., and many others. These companies
may offer products that are similar to our solar energy systems, and we primarily compete with these companies based on price. We believe
that we compete favorably with these companies.
The Company anticipates that the following factors
will give us a competitive advantage because we expect to become a technology company insulated by patents creating a barrier to competition,
as well as a company selling a product with brand recognition and expect the customers to select the Company because:
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We offer unique innovative products. |
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We offer a flexible menu of product financing options and types of agreements. |
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We are located in the states where utility costs are high and/or incentives for solar energy systems are available, therefore, offering an attractive alternative to conventional power sources. |
Employees
The Company has no full-time employees.
Patents and Trademarks
The Company holds no patents, nor at this time, has any patent
pending.
The company relies on a combination of trade
secrets and contractual protections to establish and protect its intellectual proprietary rights. It may rely on patents held by its partners
with whom it has contractual relationships.
Government Regulation
An interconnection agreement is generally required
from the applicable local electricity utility to interconnect a solar energy system with the utility grid. In almost all cases, interconnection
agreements are standard form agreements that have been pre-approved by the local public utility commission or other regulatory body with
jurisdiction over interconnection. As such, no additional regulatory approvals are required once interconnection agreements are signed.
We prepare and submit these agreements on behalf of our customers to ensure compliance with interconnection rules.
Our operations are subject to stringent
and complex federal, state and local laws and regulations governing the occupational health and safety of our employees and wage regulations.
For example, we are subject to the requirements of the federal Occupational Safety and Health Act, as amended, or “OSHA,”
and comparable state laws that protect and regulate employee health and safety. We expend resources to comply with OSHA requirements and
industry best practices. Federal and/or state prevailing wage requirements, which generally apply to any “public works” construction
project that receives public funds, may apply to installations of our solar energy systems on government facilities. The prevailing wage
is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type
of work within a particular area. Prevailing wage requirements are established and enforced by regulatory agencies. Our in-house personnel
monitors and coordinates our continuing compliance with these regulations when required.
Some jurisdictions place limits on the size or
number of solar energy systems that can be interconnected to the utility grid. This can limit our ability to sell and install solar energy
systems in some markets. The regulatory environment is constantly changing.
Environmental Regulations
The Company does not have any plans to manufacture
the products it intends to market, sell and install. The manufacturers of these products may use, generate, and discharge toxic, volatile,
or otherwise hazardous chemicals and wastes in its research and development, manufacturing, and construction activities. These companies
will likely be subject to a variety of federal, state, and local governmental laws and regulations related to the purchase, storage, use,
and disposal of hazardous materials. In addition, these laws and regulations may impose substantial liabilities for the failure to comply
with them or for any contamination resulting from the operations associated with our assets. Laws and regulations protecting the environment
have become more stringent in recent years, and may in certain circumstances impose “strict liability,” rendering a person
liable for environmental damage without regard to negligence or fault on the part of such person. Such laws and regulations may expose
us to liability for the conduct of or conditions caused by others, or for our acts which were in compliance with all applicable laws at
the time such acts were performed. If these companies do not comply with these regulations and are unable to manufacture the products
we intend to market and sell, we may be adversely effected if we are unable to obtain replacement manufacturers and products which may
be costly and may have a material adverse effect on our business and results of operations.
Government Incentives and Policies
U.S. federal, state and local governments have
established various policies, incentives, and financial mechanisms to reduce the cost of solar energy and to accelerate the adoption of
solar energy. These incentives include tax credits, cash grants, production-based incentives, tax abatements, and rebates. These incentives
help catalyze private sector investments in solar energy, energy efficiency, and energy storage measures, including the installation and
operation of residential and commercial solar energy systems.
Following the extension of the Solar Investment
Tax Credit in December 2015, the Internal Revenue Code allows a United States taxpayer to claim a tax credit of 30% of qualified expenditures
for a solar energy system that is placed in service on or before December 31, 2019. This credit is scheduled to decline to 26% effective
January 1, 2020, 22% in 2021, and then to 10% for commercial projects and 0% for residential projects in 2022.
Many U.S. states and local jurisdictions have
established property tax incentives for renewable energy systems, which include exemptions, exclusions, abatements, and credits. Many
state governments, investor-owned utilities, municipal utilities, and co-operative utilities offer rebates or other cash incentives for
the installation and operation of a solar energy system or energy-related products.
Many states have a regulatory policy known as
net energy metering, or net metering. Net metering typically allows our customers to interconnect their on-site solar energy systems to
the utility grid and offset their utility electricity purchases by receiving a bill credit at the utility’s retail rate for energy
generated by their solar energy system that is exported to the grid in excess of electric load used by customers.
Some states have established limits on net metering,
fees on solar energy systems, or reduced the credit available for electricity generated by solar energy systems that are connected to
the utility grid. For example, Hawaii, Nevada, and Mississippi have announced net metering policies that establish wholesale rates, not
retail rates, for crediting electricity produced by solar energy systems. This has adversely impacted the attractiveness of solar energy
to residential customers in these markets. The California Public Utilities Commission issued a ruling that maintains the net energy metering
credit at full retail value but adds new charges and requirements for customers installing a solar energy system. On the other hand, other
states continue to expand their net metering programs. New York, for example, has suspended its cap on solar photovoltaic systems covered
by the state’s net metering program.
Some states like Massachusetts have offered
Solar Renewable Energy Credits (“SRECs”) that provide cash payments based on the electricity produced by solar energy systems
as an incentive for customers to invest in these systems. These programs are generally capped and must be reauthorized or extended when
the cap is reached in order for the incentives to be continued. The Massachusetts Department of Energy Resources announced that the total
capacity available under its most recent SREC program (SREC-II) for projects over 25 kW had been exceeded in early 2016, however it was
announced on January 31, 2017, by the Massachusetts Department of Energy Resources that their new program, called Solar Massachusetts
Renewable Target (“SMART”), is targeted to start in April 2018 and that the SREC II program would be extended in order to
bridge between the two programs. The SREC II program was ultimately extended until November 26, 2018, at which point the first applications
for SMART were accepted. The first SMART incentive allocations began on January 15, 2019.
On January 22, 2018, the Office of the President
of the United States approved in substantial form, recommendations by the U.S. International Trade Commission to impose a tariff of 30%
on imports of solar cells and photovoltaic modules under Section 201 of the Trade Act of 1974, unless specifically excluded. The 30% tariff
declines 5% per year over the four-year term of the tariff. Further, the provisions of the 201 Tariff are applicable to imported solar
cells and modules from Canada, despite its being a member of the North American Free Trade Act.
Seasonality
Our quarterly net revenue and operating results
for solar energy system installations are difficult to predict and have, in the past, and may, in the future, fluctuate from quarter to
quarter as a result of changes in state, federal, or private utility company subsidies, as well as weather, economic trends and other
factors. The industry historically experienced seasonality in our solar installation business, with the first quarter representing our
lowest installation quarter of the year, primarily due to adverse weather. Additionally, the industry historically experienced seasonality
in sales of solar systems similar to ours, with the fourth and first quarters of the year seeing fewer sales orders than the second and
third quarters. We do not have the historical experience to assess seasonality for this line of our own business.
Please see further Item 1A. Risk Factors, set
forth below.
An investment in our common stock involves a high
degree of risk. An investor should carefully consider the following risk factors and the other information in this registration statement
before investing in our common stock. Our business and results of operations could be seriously harmed by any of the following risks.
Please consider the following risk factors and
other information in this offering circular relating to our business and prospects before deciding to invest in our common stock.
This offering and any investment in our common
stock involve a high degree of risk. You should carefully consider the risks described below and all of the information contained in this
offering circular before deciding whether to purchase our common stock. If any of the following risks actually occur, our business, financial
condition and results of operations could be harmed, and you may lose all or part of your investment.
The Company considers the following to be all
known material risks to an investor regarding this offering. The Company should be viewed as a high-risk investment and speculative in
nature. An investment in our common stock may result in a complete loss of the invested amount. Please consider the following risk factors
before deciding to invest in our common stock.
RISKS RELATED TO THE COVID-19 PANDEMIC
The recent COVID-19
pandemic may adversely affect our business, and ability to file timely and accurate financial information.
The COVID-19 pandemic has
materially and adversely impacted the U.S. economy and financial markets, with legislative and regulatory responses including unprecedented
monetary and fiscal policy actions across all sectors, and there is significant uncertainty as to timing of stabilization and recovery.
Because we are in the development stage, the complete impact on our business from the recent outbreak of the COVID-19 coronavirus is unknown
at this time and difficult to predict, various aspects of our business are being adversely affected by it and may continue to be adversely
affected.
Our ability to start projects and raise
funding could be adversely impacted by COVID-19 and the stay at home orders of certain states and localities/
While the COVID-19 pandemic is adversely impacting
all sectors of the economy, we may be subject to certain specific risks:
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We are attempting to raise capital through an offering pursuant to Regulation A of the Securities Act. Due to economic conditions investors may be hesitant to invest in new and emerging companies. |
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Locations where we intend to build facilities and place equipment are currently under stay at home orders from state and local governments that prevent construction and are delaying permitting of potential projects. |
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The significant decrease in oil prices lessens the appeal of solar installations as it takes longer to recover the upfront installation costs and makes pricing less competitive against fossil fuels/ |
RISKS RELATED TO THE INDUSTRY
The demand for products requiring significant
initial capital expenditures such as solar power products and related services are affected by general economic conditions.
The United States and countries worldwide have
recently experienced a period of declining economies and turmoil in financial markets. A sustained economic recovery is uncertain. In
particular, terrorist acts and similar events, continued unrest in the Middle East or war, in general, could contribute to a slowdown
of the market demand for products that require significant initial capital expenditures, including demand for solar power systems. In
addition, increases in interest rates may increase financing costs to customers, which in turn may decrease demand for our solar power
products. If economic recovery is slowed as a result of the recent economic, political and social events, or if there are further terrorist
attacks in the United States or elsewhere, we may experience decreases in the demand for our solar power products, which may harm our
operating results.
If there is a shortage of components and/or
key components rise significantly in price that may constrain our revenue growth.
The market for photovoltaic installations has
continued to grow despite worldwide financial and economic issues. The introduction of significant production capacity has continued and
has increased supply and reduced the cost of solar panels. If demand increases and supply contracts, the resulting likely price increase
could adversely affect sales and profitability. As demand for solar panels may increase with an economic recovery, demand and pricing
for solar modules could increase, potentially limiting access to solar modules and reducing our selling margins for panels.
Shortages of silicon and inverters or supply
chain issues could adversely affect the availability and cost of our solar energy systems. Manufacturers of photovoltaic modules depend
upon the availability and pricing of silicon, one of the primary materials used in photovoltaic modules. The worldwide market for silicon
from time to time experiences a shortage of supply, which can cause the prices for photovoltaic modules to increase and supplies to become
difficult to obtain. While we have been able to obtain sufficient supplies of solar photovoltaic modules to satisfy our needs to date,
this may not be the case in the future. Future increases in the price of silicon or other materials and components could result in an
increase in costs to us, price increases to our customers or reduced margins.
Other international trade conditions such as work
slowdowns and labor strikes at port facilities or major weather events can also adversely impact the availability and price of solar photovoltaic
modules.
Existing regulations and policies and changes
to these regulations and policies may present technical, regulatory and economic barriers to the purchase and use of solar power products,
which may significantly reduce demand for our products.
The market for electricity generation is heavily
influenced by foreign, U.S. 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 the U.S. these regulations and policies are being modified and may continue to be modified.
Customer purchases of or further investment in the research and development of alternative energy sources, including solar power technology,
could be deterred by these regulations and policies, which could result in a significant reduction in the potential demand for our solar
power products, for example, without certain major incentive programs and or the regulatory mandated exception for solar power systems,
utility customers are often charged interconnection or standby fees for putting distributed power generation on the electric utility network.
These fees could increase the cost to our customers of using our solar power products and make them less desirable, thereby harming our
business, prospects, results of operations and financial condition.
We anticipate that our solar power products and
their installation will be subject to oversight and regulation in accordance with national and local ordinances relating to building codes,
safety, and environmental protection, utility interconnection and metering and related matters. It is difficult to track the requirements
of individual states and design equipment to comply with the varying standards. Any new government regulations or utility policies pertaining
to our solar power products may result in significant additional expenses to us and our resellers and their customers and, as a result,
could cause a significant reduction in demand for our solar power products.
The reduction, elimination or expiration
of government subsidies and economic incentives for on-grid solar electricity applications could reduce demand for solar power systems
and harm our business.
The market for solar energy applications depends
in large part on the availability and size of local, state, and federal government and economic incentives that vary by geographic market.
The reduction, elimination or expiration of government subsidies and economic incentives for solar electricity may negatively affect the
competitiveness of solar electricity relative to conventional and non-solar renewable sources of electricity and could harm or halt the
growth of the solar electricity industry and our business.
The cost of solar power currently is less than
retail electricity rates in most markets, and we believe solar will continue to do so for the foreseeable future. As a result, federal,
state and local government bodies, the United States has provided incentives in the form of feed-in tariffs, or FITs, rebates, tax credits
and other incentives to system owners, distributors, system integrators and manufacturers of solar power systems to promote the use of
solar electricity in on-grid applications and to reduce dependency on other forms of energy. Many of these government incentives expire,
phase out over time, terminate upon the exhaustion of the allocated funding or require renewal by the applicable authority. In addition,
electric utility companies or generators of electricity from other non-solar renewable sources of electricity may successfully lobby
for changes in the relevant legislation in their markets that are harmful to the solar industry. Reductions in, or eliminations or expirations
of, governmental incentives could result in decreased demand for and lower revenue from solar PV systems, which would adversely affect
sales of our products.
Our success depends, in part, on the quality
and safety of the services we market and sell.
We do not design and manufacture our own products.
We can and do use a variety of products and do not have a commitment to any single manufacturer. We do not warranty our products because
this is the responsibility of the manufacturer. However, we do warranty our installation workmanship and could suffer a loss of customer
referrals and reputation degradation if our quality workmanship is not maintained.
The Company’s management has no specific
experience in the design and installation of solar systems and relies on consultants and other third parties.
The Company has partnered with Anthony Morali
of Renewable Energy Development LLC (“RED”), a leading expert in solar infrastructure design as the Company’s management
does not have specific experience in the installation and design of solar systems. Should the Company not be able to maintain these relationships
it would have a significant impact on our ability to continue with our business plan.
Our ability to market and sell solar systems to customers is
unproven.
Our business depends in large part on our ability to market and sell
or lease solar systems. Initially, we plan to have Renewable Energy Development, LLC to design, manufacture and install the solar systems
to our customers. Our ability market and sell the solar systems, are and will be subject to risks, including with respect to:
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our ability to secure necessary funding; |
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our ability to negotiate and execute definitive agreements with our various suppliers for hardware, or services necessary to design or manufacture the solar systems we intend to market and sell; |
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compliance with environmental, safety, and similar regulations; |
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delays by us in delivering final component designs to our suppliers; |
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quality controls that prove to be ineffective or inefficient; |
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delays or disruptions in our supply chain including raw material supplies; and |
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our ability to maintain arrangements on reasonable terms with its manufacturing partners and suppliers, engineering service providers, delivery partners, and after sales service providers. |
To date, we have limited experience, as a company,
marketing and selling or leasing our solar systems and therefore cannot assure you that we will be able to make sales on a level significant
enough to be profitable or to meet customer expectations. Any failure to do so within our projected costs and timelines would have a material
adverse effect on our business, prospects, operating results and financial condition.
We require additional capital to develop
our business.
The development of our services will require the
commitment of resources to increase the advertising, marketing and future expansion of our business. In addition, expenditures will be
required to enable us in 2020 and 2021 to conduct planned business research, development of new affiliate and associate offices, and marketing
of our existing and future products and services. Currently, we have no established bank-financing arrangements. Therefore, it is possible
that we would need to seek additional financing through a subsequent future private offering of our equity securities, or through strategic
partnerships and other arrangements with corporate partners.
We cannot give any assurance that any additional
financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities could result
in dilution to our stockholders. Sales of existing shareholders of the common stock and preferred stock in the public market could adversely
affect prevailing market prices and could impair the Company’s future ability to raise capital through the sale of the equity securities.
The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing
covenants that would restrict our compensation. If adequate, additional financing is not available on acceptable terms, we may not be
able to implement our business development plan or continue our business operations.
You could suffer dilution should the Series
B Convertible Preferred Stockholders convert their shares.
If all of the Series B Convertible Preferred Stock
is converted at the current conversion rate, an additional 600,000,000,000 shares of common stock could be issued to the holder thereof
(i.e. more than the current number of authorized shares). This could cause you to suffer immediate and significant dilution such
that the percentage of shares held by current shareholders after full conversion of the 600,000 Series B Convertible Preferred stock would
be less than 0.1%.
Our liability insurance may not be adequate
in a catastrophic situation.
We do not currently maintain property damage insurance
or product liability insurance. Material damage to, or the loss to our facilities or equipment due to fire, severe weather, flood or other
catastrophe, even if insured against, could result in a significant loss to the Company.
The services we intend to sell to customers
may not gain market acceptance, which would prevent us from achieving sales and market share.
The market for solar power is emerging and rapidly
evolving, and its future success is uncertain. If solar power technology proves unsuitable for widespread commercial deployment or if
demand for solar power products fails to develop sufficiently, we would be unable to achieve sales and market share. In addition, demand
for solar power in the markets and geographic regions we target may not develop or may develop more slowly than we anticipate. Many factors
may influence the widespread adoption of solar power technology and demand for solar power, including:
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Performance and reliability of solar power products as compared with conventional and non-solar alternative energy products; |
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Cost-effectiveness of solar power technologies as compared with conventional and competitive alternative energy technologies; |
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Success of alternative distributed generation technologies such as hydrogen fuel cells, wind turbines, bio-diesel generators, and large-scale solar thermal technologies; |
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Fluctuations in economic and market conditions that impact the viability of conventional and competitive alternative energy sources; |
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Increases or decreases in the prices of oil, coal and natural gas; |
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Capital expenditures by customers, who tend to decrease when domestic or foreign economies slow; and |
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We face intense competition from other system
integrators and other energy generation products. If we fail to compete effectively, we may be unable to increase our market share and
sales.
The mainstream power generation market and related
product sectors are well established, and we are competing with power generation from more traditional processes that can generate power
at lower costs than most renewable or environmentally driven processes. Further, within the renewable power generation and technologies
markets, we face competition from other methods of producing renewable or environmentally positive power. Then, the solar power market
itself is intensely competitive and rapidly evolving. Our competitors have established market positions more prominent than ours, and
if we fail to attract and retain customers, we may be unable to achieve sales and market share. There are a number of major multi-national
corporations that provide solar installation services such as REC, Solar City, and Sunpower Corporation. Established integrators are growing
and consolidating, including GoSolar, Sunwize, Sunenergy, and Real Good Solar and we expect that future competition will include new entrants
to the solar power market. Further, many of our competitors may be developing or may be currently providing products based on new solar
power technologies that may have costs similar to, or lower than, our projected costs.
Some of our competitors are substantially
larger than we are, have longer operating histories and have substantially greater financial, technical, manufacturing and other resources
than we do. Our competitors’ greater sizes in some cases provide them with competitive advantages with respect to manufacturing
costs and the ability to allocate costs across a greater volume of production and purchase raw materials at lower prices. They also have
far greater name recognition, an established distribution network and an installed base of customers. In addition, many of our competitors
have well-established relationships with current and potential resellers, which have extensive knowledge of our target markets. As a result,
our competitors will be able to devote greater resources to the research, development, promotion, and sale of their products and may be
able to respond more quickly to evolving industry standards and changing customer requirements than we can.
Our sales and installations are subject
to seasonality of customer demand and weather conditions which are outside of our control.
Our sales are subject to the seasonality of when
customers buy solar energy systems. Historically, we are expected to experience spikes in orders during the spring and summer months which,
due to lead time, result in installations and revenue increase during the summer and fall. Tax incentives can generate additional backlog
prior to the end of the year, depending upon the incentives available and whether customers are looking to take advantage of such incentives
before the end of the year.
Our ability to construct systems outdoors may
be impacted by inclement weather, which can be most prominent in our geographic installation regions during the first and fourth quarters
of the year. As a result of these factors, our first quarter is generally our slowest quarter of the year. If unexpected natural events
occur and we are unable to manage our cash flow through these seasonal factors, there could be a negative impact on our financial position,
liquidity, results of operations and cash flow.
Our inability to respond to changing technologies
and issues presented by new technologies could harm our business.
The solar energy industry is subject to technological
change. If we rely on products and technologies that cease to be attractive to customers, or if we are unable to respond appropriately
to changing technologies and changes in product function or quality, we may not be successful in capturing or retaining significant market
share. In addition, any new technologies utilized in our solar energy systems may not perform as expected or as desired, in which event
our adoption of such products or technologies may harm our business.
We rely heavily on a limited number of designers,
suppliers, installers and other vendors, and if these companies were unable to deliver critical components and services, it would adversely
affect our ability to operate and our financial results.
We rely on a limited number of third-party suppliers
to provide the components used in our solar energy systems. We also rely on key vendors to provide internal and external services which
are critical to our operations, including installation of solar energy systems, accounting and customer relationship management software,
facilities and communications. The failure of our suppliers and vendors to supply us with products and services in a timely manner or
on commercially reasonable terms could result in lost orders, delay our project schedules, limit our ability to operate and harm our financial
results. If any of our suppliers or vendors were to fail to supply our needs on a timely basis or to cease providing us key components
or services we use, we would be required to secure alternative sources of supply. We may have difficulty securing alternative sources
of supply. If this were to occur, our business would be harmed.
The installation and ongoing operation of
solar energy systems involves significant safety risks.
Solar energy systems generate electricity, which
is inherently dangerous. Installation of these systems also involves the risk of fire, personal injuries occurring at the job site and
other risks typical of construction projects. Although we take many steps to assure the safe installation and operation of our solar energy
systems, and maintain insurance against such liabilities, we may nevertheless be exposed to significant losses arising from personal injuries
or property damage arising from our projects.
United States trade policy affects our
ability to purchase domestic solar panels.
One of the effects of the United States tariffs
on imported solar panels, including solar panels from China, is an increased demand for products manufactured in the United States which
may affect both our ability to purchase solar panels and the price and other terms at which solar panels are available to us. Because
of the increased demand for domestically manufactured solar panels, we cannot assure you that, if we seek to purchase solar panels from
Renewable Energy Development, a New York-based company, it will have the capacity to fill our orders at a commercially reasonable price
or that we will be able to purchase solar panels from other suppliers at a reasonable cost. Our inability to obtain domestically produced
solar panels can impair our ability to generate revenue and maintain reasonable gross margins.
Changes in net metering regulations could
impair the market for solar products.
Net metering is a billing mechanism that credits
solar energy system owners for the electricity that they add to the electricity grid. If the owner of a solar system generates more electricity
than it consumes, the excess electricity is sold back to the grid. California’s first net metering policy set a “cap”
for the three investor-owned utility companies in the state: Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E),
and Southern California Edison (SCE). All three have reached their cap where total solar installations in each utility’s territory
were capped at five percent of total peak electricity demand. The California Public Utilities Commission (CPUC) created the known as “Net
Metering 2.0” (NEM 2.0) that extends California net metering. NEM 2.0 is slightly different from the first net metering policy.
Under NEM 2.0, customers will still receive the retail credit for electricity produced but will be required to pay more in Non-Bypassable
Charges. NEM 2.0 also requires new solar customers to pay a one-time Interconnection Application Fee, the amount of which is dependent
upon the utility company. For systems under 1MW, this fee is $132 for San Diego Gas & Electric, $145 for Pacific Gas & Electric,
and $75 for Southern California Edison. NEM 2.0 customers are also required to use Time of Use (ToU) rates. These changes alter the return
on investment for solar customers, and our pricing needs to reflect this change in order for the purchase of a solar system to be economically
attractive to the customer, which may be reflected in lower prices and reduced margins.
To the extent that utility companies are not required
to purchase excess electricity from owners of solar systems or are permitted to lower the amounts paid, the market for solar systems may
be impaired. Because net metering can enable the solar system owner to further reduce the cost of electricity by selling excess electricity
to the utility company, any elimination or reduction of this benefit would reduce the cost savings from solar energy. We cannot assure
you that net metering will not be eliminated, or the benefits significantly reduced for future solar systems which may dampen the market
for solar energy.
Although we are not regulated as a utility
company, changes in regulations may subject us to regulation as a utility.
We are presently exempt from regulation as a utility
as we have “qualifying facility” status with the Federal Energy Regulatory Commission for all of our qualifying solar energy
projects. Any local, state, federal or foreign regulations which classify us as a utility could place significant restrictions on our
ability to operate our business by prohibiting or otherwise restricting our sale of electricity. If we were subject to the same state,
federal or foreign regulatory authorities as utility companies in the United States or if new regulatory bodies were established to oversee
our business in the United States or in foreign markets such as China, then our operating costs would materially increase, which would
impair our ability to generate a profit from our business.
Our business would be impaired if we lose
our licenses, if more stringent government regulations are enacted or if we fail to comply with the growing number of regulations pertaining
to solar energy and consumer financing industries.
Our business is or may become subject to numerous
federal and state laws and regulations. The installation of solar energy systems performed by us is subject to oversight and regulation
under local ordinances, building, zoning and fire codes, environmental protection regulation, utility interconnection requirements, and
other rules and regulations. The financing transactions the Company are subject to numerous consumer credit and financing regulations.
The consumer protection laws, among other things:
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require us to obtain and maintain licenses and qualifications; |
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limit certain interest rates, fees and other charges we are allowed to charge; |
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limit or prescribe certain terms of the loans to our customers; and |
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require specific disclosures and the use of special contract forms. |
The number of laws affecting both aspects of our
business continues to grow. We can give no assurances that we will properly and timely comply with all laws and regulations that may affect
us. If we fail to comply with these laws and regulations, we may be subject to civil and criminal penalties. In addition, non-compliance
with certain consumer disclosure requirements related to home solicitation sales and home improvement contract sales affords residential
customers with a right to rescind such contracts in some jurisdictions.
Changes in regulations relating to fossil
fuel can impact the market for renewable energy, including solar.
The market for renewable energy in general and
solar energy, in particular, is affected by regulations relating to the use of fossil fuel and the encouragement of renewable energy.
To the extent that changes in regulations have the effect of reducing the cost of gas, oil, and coal or encouraging the use of such fuels,
the market for solar systems may be impaired.
A material decline in the price of electricity
charged by the local utility company to commercial users may impair our ability to attract commercial customers.
Often large commercial customers pay less for
energy from utility companies than residential customers. To the extent that utility companies offer commercial customers a lower rate
for electricity, they may be less willing to switch to solar energy. Under such conditions, we may be unable to offer solar energy systems
in commercial markets that produce electricity at rates that are competitive with the price of retail electricity they are able to obtain
from the local utility company. In such event, we would be at a competitive disadvantage compared to the local utility company and may
be unable to attract new commercial customers, which would impact our revenues.
Solar energy and other forms of renewable energy
compete with other forms of energy and the attractiveness of solar energy reflects the cost of electricity from the local grid.
Solar energy competes with all other forms of
energy, including, particularly local utility companies, whose pricing structure effectively determines the market for solar energy. If
consumers, whether residential or commercial, believe that they are paying and will continue to pay too much for electricity from a local
utility company, they may consider other alternatives, including alternative providers of electricity from local utility companies as
well as forms of renewable energy. If they are in a location where, because of the climate and geography, solar energy is a possibility,
they may consider solar energy as an alternative, provided they are satisfied that they will receive net savings in their cost of electricity
and their system will provide them with a constant source of energy. Further, although some customers may purchase a solar energy system
because of environmental considerations, we believe that the cost of electricity is the crucial factor that influences the decision of
a user, particularly a commercial user, to elect to use solar energy.
RISKS RELATED TO OUR BUSINESS
Our annual and quarterly financial results
are subject to significant fluctuations depending on various factors, many of which are beyond our control.
Our sales and operating results can vary significantly
from quarter to quarter and year to year depending on various factors, many of which are beyond our control. These factors include, but
are not limited to:
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seasonal consumer demand for our products; |
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discretionary spending habits; |
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changes in pricing in, or the availability of supply in, the used powerboat market; |
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variations in the timing and volume of our sales; |
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the timing of our expenditures in anticipation of future sales; |
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sales promotions by us and our competitors; |
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changes in competitive and economic conditions generally; |
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consumer preferences and competition for consumers’ leisure time; and |
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changes in the cost or availability of our labor. |
As a result, our results of operations may decline
quickly and significantly in response to changes in order patterns or rapid decreases in demand for our products. We anticipate that fluctuations
in operating results will continue in the future.
Our limited operating history with our current
business lines makes it difficult to evaluate our current and future prospects and may increase the risk associated with your investment.
We have a limited operating history with our current
business line and have been involved primarily in organizational matters. We have also generated no revenues in this line to date. Consequently,
our operations are subject to all the risks inherent in the establishment of new business lines in industries within which we are not
necessarily familiar. We have encountered and will continue to encounter risks and difficulties frequently experienced by rapidly growing
companies in constantly evolving industries, including the risks described in this prospectus. If we do not address these risks successfully,
our business, financial condition, results of operations and prospects will be adversely affected, and the market price of our common
stock could decline. As such, any predictions about our future revenue and expenses may not be as accurate as they would be if we had
a longer operating history in our current business lines or operated in a more predictable market.
We will need a significant amount of capital
to carry out our proposed business plan and, unless we are able to raise sufficient funds or generate sufficient revenues, we may be forced
to discontinue our operations.
Our ability to obtain the necessary financing
to execute our business plan is subject to a number of factors, including general market conditions and investor acceptance of our business
plan. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable
to raise sufficient funds or generate them through revenues, we will have to significantly reduce our spending, delay or cancel our planned
activities or substantially change our current corporate structure. There is no guarantee that we will be able to obtain any funding or
that we will have sufficient resources to continue to conduct our operations as projected, any of which could mean that we will be forced
to discontinue our operations.
Conflict of Interest
The Company is subject to various potential and
actual conflicts of interest arising out of its relationship with its Chief Executive and Financial Officer and/or affiliates of the Company:
transactions with affiliates of the Chief Executive and Financial Officer of the Company and/or such other persons and entities; the payment
of substantial sums from the proceeds of this offering to such affiliates; and, competition for the time and services of the Chief Executive
and Financial Officer, agents, employees, and affiliates with other projects or businesses that they run.
Dealings with the Company
The Chief Executive and Financial Officer controls
the business and affairs of the Company. Consequently, the Chief Executive and Financial Officer will be able to control his own compensation
and to approve dealings, if any, by the Company with other entities with which he is also involved. Furthermore, the Chief Executive and
Financial Officer controls the majority of the voting power in the Company. Although the Chief Executive and Financial Officer intends
to act fairly and in full compliance with his fiduciary obligations, there can be no assurance that the Company will not, as a result
of the conflict of interest described above, sometimes enter into arrangements under terms less beneficial to the Company than it could
have obtained had it been dealing with unrelated persons.
We operate in a highly competitive industry and potential competitors
could duplicate our business model.
We are involved in a highly competitive industry
where we compete with numerous other companies who offer products and services similar to those we offer. Although some aspects of our
business may be protected by intellectual property laws (patent protection, trade secret protection, copyrights, trademarks, etc.), we
own no patents and potential competitors will likely attempt to duplicate our business model. Some of our potential competitors may have
significantly greater resources than we have, which may make it difficult for us to compete. There can be no assurance that we will be
able to successfully compete against these other entities. Additionally, our contractors are not subjected to an exclusive contractual
relationship with the Company.
Limited Full-Time Employees and Staff
Assuming successful completion of this Offering,
we intend to hire necessary support staff and will hire, as and when needed, such management, support personnel, independent consultants,
as it may deem necessary for the purposes of its business operations and the President. There can be no assurance that the Company and
its President will be able to recruit and hire required support personnel under acceptable terms. The Company’s business would be
adversely affected if it were unable to retain the required personnel.
Dealings with the Company
The Company’s Chief Executive and Financial
Officer controls the business and affairs of the Company. Consequently, the he will be able to control his own compensation and to approve
dealings, if any, by the Company with other entities with which he is also involved. Furthermore, the Chief Executive and Financial Officer
controls the majority of the voting power in the Company. Although the President intends to act fairly and in full compliance with his
fiduciary obligations, there can be no assurance that the Company will not, as a result of the conflict of interest described above, sometimes
enter into arrangements under terms less beneficial to the Company than it could have obtained had it been dealing with unrelated persons.
Because our Chief Executive Officer, Chief Financial Officer
and Director, controls 99% of the voting power of the outstanding capital stock, he will effectively control the Company, which in turn
could decrease the price and marketability of the shares
Mr. DiPrima holds voting control over the 600,000 shares of Series
B Convertible Preferred Stock held by the We Work Revocable Trust. The Series B Preferred Shares have the right to vote in the aggregate,
on all shareholder matters votes equal to 99% of the total shareholder vote on any and all shareholder matters. As a result, Mr. DiPrima
will have the ability to control the Company as follows:
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elect or defeat the election of our Directors; |
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amend or prevent amendment of our articles of incorporation or bylaws; |
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effect or prevent a merger, sale of assets or other corporate transaction; and |
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affect the outcome of any other matter submitted to the stockholders for vote |
Moreover, because of the significant voting position controlled by
our insider, new investors will not be able to effect a change in the Company’s business or management, and therefore, shareholders
would be subject to decisions made by Mr. DiPrima. Management’s stock voting position may discourage a potential acquirer from making
a tender offer or otherwise attempting to obtain control of the Company; this could reduce our stock price or prevent our stockholders
from realizing a premium over our stock price.
Limitation of Liability of the Company’s
Officers and Directors
To the maximum extent allowed by law, the Company’s
Officers and Directors will have limited liability for breach of fiduciary duty and for (i) any breach of the duty of loyalty to the Company
or its shareholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law;
or (iii) any transactions from which the President and its Affiliates derived an improper personal benefit.
Exclusive Selection of Forum in the Bylaws
Our corporate bylaws provide that unless the Corporation
consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, all Internal Corporate Claims, as
defined in the Bylaws, may be brought solely and exclusively in the District Court, Sheridan County, Wyoming (or, if such court does not
have jurisdiction, the United States Court for the District of Wyoming). “Internal Corporate Claims” are defined as claims,
including claims in the right of the Corporation, brought by a stockholder (including a beneficial owner) (i) that are based upon a violation
of a duty owed by a current or former Director or officer or stockholder in such capacity or (ii) as to which the WCC confers jurisdiction
upon the District Court. Please read our bylaws carefully in connection with this risk factor.
This choice of forum provision does not preclude
or contract the scope of exclusive federal jurisdiction for any actions brought under the Exchange Act. Section 27 of the Exchange Act
creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules
and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability
created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and the Company does not intend
for the exclusive forum provision to apply to Exchange Act claims. It could apply, however, to a suit that falls within one or more of
the categories enumerated in the exclusive forum provision and that asserts claims under the Securities Act, inasmuch as Section 22 of
the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability
created by the Securities Act or the rules and regulations thereunder. There is uncertainty as to whether a court would enforce such an
exclusive forum provision with respect to claims under the Securities Act. In addition, our stockholders will not be deemed to have waived
the Company’s compliance with the federal securities laws and the rules and regulations thereunder. Subject to the foregoing, any
person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have
notice of and consented to this provision of our Bylaws.
RISKS RELATED TO OUR CORPORATE OPERATIONS
We have a limited operating history under
the current business plan and may never be profitable.
Since the Reorganization, we have been involved
primarily in organizational activities and have no reviews to date. Since we have a limited operating history following the implementation
of the current business plan, it is difficult for potential investors to evaluate our business. We expect that we will continue to need
to raise additional capital in order to fund our operations. There can be no assurance that such additional capital will be available
to us on favorable terms or at all. There can be no assurance that we will be profitable.
Our auditors have indicated doubt about
our ability to continue as a going concern.
Our auditors have expressed doubt about our ability
to continue as a going concern. Our financial statements do not include adjustments that might result from the outcome of this uncertainty.
If we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.
We have a history of operating losses and there can be no assurance
that we can achieve or maintain profitability.
We have a history of operating losses and may
not achieve or sustain profitability due to the competitive and evolving nature of the industries in which we operate. Our failure to
sustain profitability could adversely affect the Company’s business, including our ability to raise additional funds.
No intention to pay dividends.
A return on investment may be limited to the value
of our common stock. We do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common
stock will depend on earnings, financial condition, and other business and economic factors affecting it at such time as the Board may
consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and
development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends
to the holders of our common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of the Board.
If we do not pay dividends, our common stock may be less valuable because a return on your investment would only occur if the Company’s
stock price appreciates.
We depend on key personnel and future members
of management, and the loss of services of one or more members of our senior management team, or our inability to attract and retain highly
qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders,
business partners and existing and prospective industry participants, which could negatively affect our financial condition, results of
operations, cash flow and trading price of our common stock.
Our success depends on our ability to attract
and retain the services of executive officers, senior officers, and community managers. There is substantial competition for qualified
personnel in the niche area of solar system design, manufacturing, and sales, and the loss of our key personnel could have an adverse
effect on us. Our continued success and our ability to manage anticipated future growth depend, in large part, upon the efforts of key
personnel. The loss of services of senior management and solar-panel design team which we may hire, or our inability to attract and retain
highly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with
lenders, business partners, and industry participants, which could negatively affect our financial condition, results of operations and
cash flow.
The ability of stockholders to control our
policies and effect a change of control of our company is limited by certain provisions of our Articles of Incorporation, bylaws and by
Wyoming Law.
There are provisions in our Articles of Incorporation
and bylaws that may discourage a third party from making a proposal to acquire us, even if some of our stockholders might consider the
proposal to be in their best interests. These provisions include the following:
Our Articles of Incorporation authorize our board
of directors to issue shares of preferred stock with such rights, preferences, and privileges as determined by the board, and therefore
to authorize us to issue such shares of stock. We believe these Articles of Incorporation provisions will provide us with increased flexibility
in structuring possible future financings. The additional classes or series will be available for issuance without further action by our
stockholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which
our securities may be listed or traded. Although our board of directors does not currently intend to do so, it could authorize us to issue
a class or series of stock that could, depending upon the terms of the particular class or series, delay, defer or prevent a transaction
or a change of control of our company that might involve a premium price for holders of our common stock or that our common stockholders
otherwise believe to be in their best interests.
Our board of directors may change our policies
without stockholder approval.
Our policies, including any policies with respect
to investments, leverage, financing, growth, debt, and capitalization, will be determined by our board of directors or those committees
or officers to whom our board of directors delegates such authority. Our board of directors will also establish the amount of any dividends
or other distributions that we may pay to our stockholders. Our board of directors or the committees or officers to which such decisions
are delegated will have the ability to amend or revise these and our other policies at any time without stockholder vote. Accordingly,
our stockholders will not be entitled to approve changes in our policies, and, while not intending to do so, may adopt policies that may
have a material adverse effect on our financial condition and results of operations.
Our business could be adversely impacted
if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting.
The design and effectiveness of our disclosure
controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations.
While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial
reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control
objectives all of the time. Furthermore, our disclosure controls and procedures and internal control over financial reporting with respect
to entities that we do not control or manage may be substantially more limited than those we maintain with respect to the subsidiaries
that we have controlled or managed over the course of time. Deficiencies, including any material weakness, in our internal control over
financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial
statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial
condition or liquidity.
Our Solar systems are a relatively new service
that exposes us to many new risks and uncertainties.
Our business model currently focuses on marketing
and selling solar systems. Developing a new service under a new brand with solar technology exposes us to many risks and uncertainties
that are new to our business. We have limited experience in the design, manufacture, marketing, distribution and sale of these services
and rely on third parties to do so. Our ability to be successful with our services will depend on a number of factors, including whether:
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We can achieve and maintain customer acceptance of our new services; |
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We can rapidly develop and successfully introduce our services in response to changing customer preferences; |
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We can maintain an adequate level of service quality over numerous solar systems, which must be designed, manufactured and introduced rapidly to keep pace with changing customer preferences and competitive factors; |
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We can successfully manage our third-party contract designers and manufacturers located outside and/or inside the U.S. on whom we are heavily dependent for the production of our solar systems; and, |
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We can successfully distribute our services through distributors, wholesalers, internet retailers and traditional retailers (many of whom distribute products from competing manufacturers) on whom we are heavily dependent. |
Our intellectual property rights or our
means of enforcing those rights may be inadequate to protect our business, which may result in the unauthorized use of our products or
reduced sales or otherwise reduce our ability to compete.
Our business and competitive position depend upon
our ability to protect our intellectual property rights and proprietary technology, including any new brands that we develop. We attempt
to protect our intellectual property rights, primarily in the United States, through a combination of patent, trade secret and other intellectual
property laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. Because of the differences in
foreign patent and other laws concerning intellectual property rights, our intellectual property rights may not receive the same degree
of protection in foreign countries as they would in the United States. Our failure to obtain or maintain adequate protection of our intellectual
property rights, for any reason, could have a materially adverse effect on our business, results of operations and financial condition.
Further, any patents issued in connection with our business may not be broad enough to protect all of the potential uses of our technology.
We also rely on unpatented proprietary technology.
It is possible others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology.
To protect our trade secrets and other proprietary information, we will require our employees, consultants and advisors to execute proprietary
information and invention assignment agreements when they begin working for us. We cannot assure these agreements will provide meaningful
protection of our trade secrets, unauthorized use, misappropriation or disclosure of trade secrets, know-how or other proprietary information.
Despite our efforts to protect this information, unauthorized parties may attempt to obtain and use information that we regard as proprietary.
If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected.
In addition, when others control the prosecution,
maintenance and enforcement of certain important intellectual property, such as technology licensed to us, the protection and enforcement
of the intellectual property rights may be outside of our control. If the entity that controls intellectual property rights that are licensed
to us does not adequately protect those rights, our rights may be impaired, which may impact our ability to develop, market and commercialize
our products. Further, if we breach the terms of any license agreement pursuant to which a third party licenses us intellectual property
rights, our rights under that license may be affected and we may not be able to continue to use the licensed intellectual property rights,
which could adversely affect our ability to develop, market and commercialize our products.
If third parties claim we are infringing
or misappropriating their intellectual property rights, we could be prohibited from selling our products, be required to obtain licenses
from third parties or be forced to develop non-infringing alternatives, and we could be subject to substantial monetary damages and injunctive
relief.
The solar power industry is characterized by the
existence of a large number of patents and frequent litigation based on allegations of patent infringement. We are aware of numerous issued
patents and pending patent applications owned by third parties that may relate to current and future generations of solar energy. The
owners of these patents may assert the manufacture, use or sale of any of our products infringes one or more claims of their patents.
Moreover, because patent applications can take many years to issue, there may be currently pending applications, unknown to us, which
may later result in issued patents that materially and adversely affect our business. Third parties could also assert claims against us
that we have infringed or misappropriated their intellectual property rights. Whether or not such claims are valid, we cannot be certain
we have not infringed the intellectual property rights of such third parties. Any infringement or misappropriation claim could result
in significant costs or substantial damages to our business or an inability to manufacture, market or sell any of our PV modules found
to infringe or misappropriate. Even if we were to prevail in any such action, the litigation could result in substantial cost and diversion
of resources that could materially and adversely affect our business. A large number of patents, the rapid rate of new patent issuances,
the complexities of the technology involved, and uncertainty of litigation increase the risk of business assets and management’s
attention being diverted to patent litigation. Even if obtaining a license were feasible, it could be costly and time-consuming. We might
be forced to obtain additional licenses from our existing licensors in the event the scope of the intellectual property we have licensed
is too narrow to cover our activities, or in the event, the licensor did not have sufficient rights to grant us the license(s) purportedly
granted. Also, some of our licenses may restrict or limit our ability to grant sub-licenses and/or assign rights under the licenses to
third parties, which may limit our ability to pursue business opportunities.
There has been only a limited public market
for our common stock and an active trading market for our common stock may not develop following this offering.
There has not been any broad public market for
our common stock, and an active trading market may not develop or be sustained. The trading volume of our Common Stock may be and has
been limited and sporadic. This situation is attributable to a number of factors, including the fact that we are a small company that
is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such persons, they may tend to be risk-averse and would be reluctant
to follow an unproven company such as ours or purchase or recommend the purchase of our shares of Common Stock until such time as we became
more seasoned and viable. As a consequence, there may be periods when trading activity in our shares is minimal, as compared to a seasoned
issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on
share price. We cannot give any assurance that a broader or more active public trading market for our common stock will develop or be
sustained, or that current trading levels will be sustained.
Investors may have difficulty in reselling
their shares due to the lack of market.
Our common stock is not currently traded on any
exchange but is quoted on OTC Markets Pink marketplace under the trading symbol “GSFI.” There is a limited trading market
for our common stock. There is no guarantee that any significant market for our securities will ever develop. Further, state securities
laws may make it difficult or impossible to resell our shares in certain states. Accordingly, our securities should be considered highly
illiquid.
The market price and trading volume of
our common stock may be volatile.
Even if an active trading market develops for
our common stock, the trading price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate
and cause significant price variations to occur.
Some of the factors that could negatively affect
our share price or result in fluctuations in the price or trading volume of our common stock include:
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actual or anticipated variations in our quarterly operating results or dividends; |
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changes in our funds from operations or income estimates; |
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publication of research reports about us or solar energy industry; |
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changes in market valuations of similar companies; |
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adverse market reaction to any additional debt we incur in the future; |
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additions or departures of key management personnel; |
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actions by institutional stockholders; |
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speculation in the press or investment community; |
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the realization of any of the other risk factors presented in this registration statement; |
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the extent of investor interest in our securities; |
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investor confidence in the stock and bond markets, generally; |
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changes in tax laws; |
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future equity issuances; |
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failure to meet income estimates; and |
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general market and economic conditions. |
In the past, securities class-action litigation
has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation
could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our
financial condition, results of operations, cash flow and the trading price of our common stock.
There could be volatility in our share price
due to shares held by only a few people.
A small number of stockholders own a significant
portion of our public float. The Company has no control over the decisions of any of these stockholders to retain ownership of their shares.
The trading price of the Company’s common stock could be adversely affected or be subject to volatility if one or more of these
stockholders should determine to sell their shares.
Furthermore, the President of the Company owns
600,000 shares of Series B Convertible Preferred Stock. If all of the Series B Convertible Preferred Stock is converted at the current
conversion rate, an additional 600,000,000,000 shares of common stock could be issued to the holders thereof (i.e. more than the
current number of authorized shares).
Our shares are considered to be a “Penny
Stock,” which impairs trading liquidity.
Disclosure requirements pertaining to penny stocks
may reduce the level of trading activity in the market for our common stock and investors may find it difficult to sell their shares.
Trades of our common stock will be subject to Rule 15g-9 of the SEC which rule imposes certain requirements on broker/dealers who sell
securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule,
brokers/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser’s written
agreement to the transaction prior to sale. The SEC also has rules that regulate broker/dealer practices in connection with transactions
in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect
to transactions in that security is provided by the exchange or system). 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 standardized risk disclosure document prepared by the SEC that 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. The bid and offer quotations,
and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting
the transaction and must be given to the customer in writing before or with the customer’s confirmation.
Future issuances of debt securities and
equity securities may negatively affect the market price of shares of our common stock and, in the case of equity securities, may be dilutive
to existing stockholders.
In the future, we may issue debt or equity securities
or incur other financial obligations, including stock dividends and shares that may be issued in exchange for common units and equity
plan shares/units. Upon liquidation, holders of our debt securities and other loans and preferred stock will receive a distribution of
our available assets before common stockholders. We are not required to offer any such additional debt or equity securities to existing
stockholders on a preemptive basis. Therefore, additional common stock issuances, directly or through convertible or exchangeable securities
(including common units and convertible preferred units), warrants or options, will dilute the holdings of our existing common stockholders
and such issuances or the perception of such issuances may reduce the market price of shares of our common stock. Any convertible preferred
units would have, and any series or class of our preferred stock would likely have, a preference on distribution payments, periodically
or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders.
As an “Emerging Growth Company”
any decision to comply with the reduced disclosure requirements applicable to emerging growth companies could make our common stock less
attractive to investors.
We are an “emerging growth company,”
as defined in the JOBS Act, and, for as long as we continue to be an “emerging growth company,” we may choose to take advantage
of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,”
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. We could be an “emerging growth company” for up to five years, or until the earliest of
(i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large
accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that
is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii)
the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
In addition, Section 107 of the JOBS Act also
provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected
to opt into the extended transition period for complying with the revised accounting standards.
Our status as an “Emerging Growth
Company” under the JOBS Act of 2012 may make it more difficult to raise capital.
Because of the exemptions from various reporting
requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying
with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional
capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe
that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital
as and when we need it, our financial condition and results of operations may be materially and adversely affected.