0001437749-16-032419.txt : 20160519 0001437749-16-032419.hdr.sgml : 20160519 20160519161843 ACCESSION NUMBER: 0001437749-16-032419 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 62 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20160519 DATE AS OF CHANGE: 20160519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Principal Solar, Inc. CENTRAL INDEX KEY: 0001587476 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 273096175 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37424 FILM NUMBER: 161663397 BUSINESS ADDRESS: STREET 1: 211 N. ERVAY STREET 2: SUITE 300 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 855-774-7799 MAIL ADDRESS: STREET 1: 2560 KING ARTHUR BLVD STREET 2: SUITE 124 PMB 65 CITY: LEWISVILLE STATE: TX ZIP: 75056 10-Q 1 psww20160331_10q.htm FORM 10-Q psww20160331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2016

 

Commission File No. 333-193058

 

 

PRINCIPAL SOLAR, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

27-3096175

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

2560 King Arthur Blvd Suite 124 PMB 65

Lewisville, TX 75056 

(Address of principal executive offices)

 

(855) 774-7799

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

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

 

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

 

Large accelerated filer ☐

Accelerated filer ☐ 

Non-accelerated filer ☐ 

Smaller reporting company ☑ 

  

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

 

 The number of shares outstanding of the registrant’s common stock as of May 13, 2016, was 5,564,2580.

  

 
 

 

 

 TABLE OF CONTENTS

 

 

Page

Introductory Comment

 

  2

Forward-Looking Statements

2

   

PART I – FINANCIAL INFORMATION

 
     

Item 1

Financial Statements

3

Item 2

Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

18

Item 3

Quantitative and Qualitative Disclosures About Market Risk

20

Item 4

Controls And Procedures

20

     

PART II – OTHER INFORMATION

 
     

Item 1

Legal Proceedings

22

Item 2

Unregistered Sales Of Equity Securities And Use Of Proceeds

23

Item 6

Exhibits

24

      

SIGNATURES

24

   

Exhibit Index

25

 

 
 

 

 

INTRODUCTORY COMMENT

 

In this Quarterly Report on Form 10-Q, the terms "we," "us," "our," "Company," “PSWW”, “PSI”, and “Principal Solar” refer to Principal Solar, Inc., a Delaware corporation, and its subsidiaries.

 

FORWARD-LOOKING STATEMENTS

 

When used in this Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding events, conditions and financial trends which may affect the Company’s future plans of operations, business strategy, operating results, and financial position. Such statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements for various reasons, including those identified under Risk Factors included in our Annual Report on Form 10-K filed on April 14, 2016. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required under federal securities laws and the rules and regulations of the United States Securities and Exchange Commission, the Company does not undertake, and specifically declines, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions, or otherwise.

  

 
2

 

 

PART I

 

ITEM 1 - FINANCIAL STATEMENTS

 

PRINCIPAL SOLAR, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   

March 31,

2016

   

December 31,

2015

 

ASSETS

               

Current Assets

               

Cash and equivalents

  $ 263,871     $ 498,330  

Accounts receivable

    -       1,949  

Prepaid assets

    29,154       43,116  

Other receivable

    1,624,000       1,624,000  

Total current assets

    1,917,025       2,167,395  

Other Assets

               

Construction in progress

    12,791,661       9,567,324  

Total other assets

    12,791,661       9,567,324  
                 

Total assets

  $ 14,708,686     $ 11,734,719  
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               

Current Liabilities

               

Accounts payable

  $ 1,050,748     $ 513,363  

Compensation payable

    424,248       390,702  

Interest payable

    191,604       60,892  

Accrued expenses and other liabilities

    204,816       97,754  

Note payable for insurance premiums

    21,099       33,495  

Note payable, related party

    300,000       -  

Arowana notes payable

    8,149,191       5,871,119  

Commissions payable

    1,540,000       1,540,000  

Mediation settlement

    800,000       800,000  

Liabilities arising from reverse merger

    1,003,839       1,003,839  

Total current liabilities

    13,685,545       10,311,164  

Total liabilities

    13,685,545       10,311,164  
                 

Commitments and Contingencies

               

Stockholders' Equity

               

Preferred stock: $0.01 par value; 2,000,000 shares authorized; 500,000 designated as Series A and 0 shares outstanding at March 31, 2016 and December 31, 2015

    -       -  

Common stock: $0.01 par value, 15,000,000 shares authorized, 5,564,258 shares issued and outstanding at March 31, 2016 and December 31, 2015

    55,642       55,642  

Additional paid-in capital

    12,364,250       12,355,916  

Accumulated deficit

    (11,396,751 )     (10,988,003 )

Total stockholders' equity

    1,023,141       1,423,555  

Total liabilities and stockholders' equity

  $ 14,708,686     $ 11,734,719  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
3

 

 

PRINCIPAL SOLAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   

Three Months Ended.

March 31,

 
   

2016

   

2015

 
                 

Revenues

               

Power generation

  $ 5,010     $ 184,075  

Total revenues

    5,010       184,075  

Cost of revenues

               

Depreciation

    -       75,495  

Direct operating costs

    5,024       52,227  

Total cost of revenues

    5,024       127,722  

Gross profit (loss)

    (14 )     56,353  
                 

General and administrative expenses

    277,557       919,671  

Operating loss

    (277,571 )     (863,318 )

Other expense

               

Interest expense

    131,177       333,474  

Loss on derivative liability warrants

    -       19,215  

Total other expense

    131,177       352,689  
                 

Loss before provision for income taxes

    (408,748 )     (1,216,007 )

Provision for income taxes

    -       1,233  

Net loss

    (408,748 )     (1,217,240 )

Income attributable to noncontrolling interest in subsidiary

    -       6,483  

Net loss attributable to common stockholders

  $ (408,748 )   $ (1,223,723 )
                 

Net loss per share attributable to common stockholders, basic and diluted

  $ (0.07 )   $ (0.23 )
                 

Weighted average shares outstanding, basic and diluted

    5,564,258       5,435,120  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
4

 

 

PRINCIPAL SOLAR, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

 

   

Common Stock

   

Additional

Paid-in

   

Accumulated

   

Principal

Solar, Inc.

   

Non-

Controlling

         
   

Shares

   

Amount

   

Capital

   

Deficit

   

Total

   

Interest

   

Total

 

December 31, 2015

    5,564,258     $ 55,642     $ 12,355,916     $ (10,988,003 )   $ 1,423,555     $ -     $ 1,423,555  

Stock-based employee compensation expense

    -       -       8,334       -       8,334       -       8,334  

Net income

    -       -       -       (408,748 )     (408,748 )     -       (408,748 )

March 31, 2016

    5,564,258     $ 55,642     $ 12,364,250     $ (11,396,751 )   $ 1,023,141     $ -     $ 1,023,141  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
5

 

 

PRINCIPAL SOLAR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   

Three Months Ended March 31,

 
   

2016

   

2015

 
                 

OPERATING ACTIVITIES

               

Net loss

  $ (408,748 )   $ (1,217,240 )

Adjustments to reconcile net loss to net cash used in operating activities:

               

Depreciation

    -       75,494  

Stock-based employee compensation expense

    8,334       341,071  

Stock-based advisor compensation expense

    -       75,000  

Loss on derivative liability on warrants

    -       19,215  

Amortization of debt discounts

    -       206,480  

Change in operating assets and liabilities:

               

Accounts receivable

    1,949       (17,645 )

Prepaid assets

    13,962       12,875  

Accounts payable

    537,384       50,551  

Compensation payable

    33,546       116,500  

Interest payable

    130,712       32,842  

Accrued expenses and other liabilities

    107,062       39,567  

Net cash provided by (used in) operating activities

    424,201       (265,290 )
                 

INVESTING ACTIVITIES

               

Construction in progress

    (3,224,336 )     (2,202,092 )

Net cash used in investing activities

    (3,224,336 )     (2,202,092 )
                 

FINANCING ACTIVITIES

               

Proceeds from Arowana note

    2,278,072       -  

Proceeds from sale of common stock

    -       1,679,001  

Proceeds from convertible debenture payable (Alpha)

    -       1,250,000  

Payment of acquisition note payable

    -       (62,455 )

Proceeds from convertible note, non-related party

    -       50,000  

Proceeds from short-term note, related party

    300,000       -  

Payments on note payable for insurance premiums

    (12,396 )     (16,268 )

Change in restricted cash

    -       28,451  

Net cash used in financing activities

    2,565,676       2,928,729  
                 

(Decrease) increase in cash and equivalents

    (234,459 )     461,347  

Cash and equivalents, beginning of period

    498,330       104,328  

Cash and equivalents, end of period

  $ 263,871     $ 565,675  
                 

Supplemental Disclosures

               

Interest paid

  $ 465     $ 94,152  
                 

Income taxes paid

  $ -     $ -  
                 

Non-Cash Transactions:

               

Discount on covertible debenture recorded as a derivative liability

  $ -     $ 1,250,000  

Construction in progress in accounts payable

    473,407       349,950  

Deposit applied to construction in progress

    -       250,000  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
6

 

 

PRINCIPAL SOLAR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - OVERVIEW

 

Basis of Presentation

 

The unaudited consolidated financial statements and related notes of have been prepared pursuant to Article 8-03 of the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted. In the opinion of management, all adjustments and information (consisting only of normal recurring accruals) considered necessary for a fair presentation of the accompanying unaudited consolidated financial statements have been included.

 

The year-end balance sheet was derived from the Company’s audited financial statements. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the Company’s audited financial statements included in its 2015 Annual Report on Form 10-K. The results of operations for the periods reflected herein are not necessarily indicative of the results to be expected for the full year.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2016, the Company has an accumulated deficit of approximately $11.4 million, and the Company has cumulatively had negative cash flows from operations since inception. Further, the Company is not considering any new large utility-scale solar projects at this time. Its ability to continue as a going concern is dependent upon the ability of the Company to collect its amounts receivable and dispose of its remaining development assets under development in order to meet its obligations, pay its liabilities arising from normal business operations when they come due, and potentially develop and execute upon a new business strategy. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

 

Concentration

 

Historically, approximately 96% of our consolidated power generation revenue arose from our Powerhouse One solar installation. The Powerhouse One subsidiary was sold in August 2015. As of the date of this report, the Company does not have any expectation of replacing the revenue generated by its Powerhouse One subsidiary with any other solar project.

 

  

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Recent Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)". ASU 2016-02 requires all leases in excess of 12 months to be reported on the balance sheet as a liability based on the net present value of the expected lease payments, and a right-to-use asset for the term of the lease. On the statement of operations, capital leases will continue to be treated as financing transactions, meaning interest and amortization will be included as rent expense. Because interest is calculated on a declining balance over time, the cost of capital leases will look more expensive at the beginning of a lease. Leases that qualify as operating leases will be reported as rent expense. The standard is effective for annual periods beginning after December 15, 2018. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.

 

In March 2016, the FASB issued ASU No. 2016-09 Compensation - Stock Compensation (Topic 718) Improvement to Employee Share-Based Payment Accounting, which affects the accounting for the income tax consequences of share-based payments, the classifications of awards as either equities or liabilities, and the classification on the statement of cash flows. ASU No. 2016-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those annual periods. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.

 

 
7

 

 

Principles of Consolidation

 

The Company consolidates the financial position, results of operations, and cash flows of all majority-owned subsidiaries. The consolidated financial statements include the accounts of the Company (including the dba Principal Solar Institute) and its subsidiaries SunGen Mill 77, LLC; SunGen Step Guys, LLC; and Powerhouse One, LLC (through the date of sale, July 1, 2015). All intercompany accounts and transactions have been eliminated in consolidation.

 

Fair Value

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.  We believe the carrying values of our current assets and current liabilities approximate their fair values, and the carrying value of our notes payable approximate their estimated fair value for debts with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings.

 

All related party transactions are evaluated by our officers and/or Board of Directors who take into account various factors, including their fiduciary duty to the Company; the relationships of the related parties to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; and the terms the Company could receive from an unrelated third party. Despite this review, related party transactions may not be recorded at fair value.

 

We do not engage in hedging activities, but did have a derivative instrument treated as a liability whose value was measured on a recurring basis (see "Fair Value Instruments" and "Derivative Liability on Warrants" included herein).

 

Fair Value Instruments

 

On March 2, 2015, the Company entered into a convertible debenture with Alpha Capital Anstalt ("Alpha") (See NOTE 6 "Convertible Debenture (Alpha)"). In connection with the loan, the Company granted Alpha complex warrants with certain "down round" protection. As such, they were treated as a derivative liability and were valued using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink® and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time all impacted the value of these warrants. The Company re-valued these warrants at the end of each reporting period and any changes are reflected as gains or losses in current period results. (See NOTE 10 - DERIVATIVE LIABILITY ON WARRANTS). In August 2015, all principal and interest pursuant to the convertible debenture was paid in full thus eliminating the terms giving rise to a potential down round price adjustment of the warrants. As such, a final re-valuation as of the repayment date was recorded and the warrants are now considered equity instruments.

 

Use of Estimates

 

The preparation of our financial statements in accordance with GAAP requires us to, on an ongoing basis, make significant estimates and judgments that affect the reported values of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities.  We base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances, the results of which form the basis for our conclusions.  Actual results may differ from these estimates under different assumptions or conditions.  Such differences could have a material impact on our future financial position, results of operations, and cash flows.

  

 
8

 

 

Cash and Equivalents

 

We consider cash, deposits, and short-term investments with original maturities of three months or less as cash and equivalents.  Our deposits are maintained primarily in two financial institutions and, at times, may exceed amounts covered by U.S. Federal Deposit Insurance Corporation insurance.

 

Accounts Receivable

 

Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of individual accounts. No allowance has been recorded in the accompanying financial statements.

 

Other Receivable

 

Other receivable reflects the remaining amount due from the August 2015 assignment of Principal Sunrise IV. Payable by the assignee at the project's commercial operation date ("COD"), the project is expected to reach COD in June 2016. No allowance has been recorded against the receivable.

 

Construction in Progress

 

The Company records as construction in progress those items of a capital and expense nature necessary to develop, construct, and place into service a solar project. Such costs consists primarily of the cost of the project company's acquisition rights, equipment costs, interconnection costs, and the costs of independent engineers, valuation firms, and rent, property taxes, financing costs, and insurance during the construction period.

 

Long-Lived Assets

 

The recoverability of the carrying value of long-lived assets is assessed when an indicator of impairment has been identified.

 

For purposes of recognition and measurement of an impairment loss, a long-lived asset or group of assets is combined with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

 

For long-lived assets, when impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If undiscounted cash flows are less than carrying value, the excess of carrying value over fair value is expensed in the period in which it is estimated to have occurred.

 

Revenue Recognition

 

Power generation revenue is recognized as delivered to the purchaser based upon electrical meters affixed to the solar array and measuring kilowatt-hours produced. Our current power generation operations do not generate renewable energy credits, performance-based incentives, or similar credits to the benefit of the Company.

 

Income Taxes

 

Income taxes are recorded under the asset and liability method under which deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in our consolidated financial statements. Income tax returns are subject to a three-year statute of limitations during which they are subject to audit and adjustment. We file income tax returns in the United States federal jurisdiction and certain states.

 

 
9

 

  

Equity Transaction Fair Values

 

The estimated fair value of our $.01 par value common stock ("Common Stock") issued in share-based payments is measured by the more relevant of (1) the prices received in private placement sales of our stock or (2) the Company's publically-quoted market price.  We estimate the fair value of simple warrants and stock options when issued or, in the case of issuances to non-employees, when vested, using the Black-Scholes option-pricing ("Black-Scholes") model that requires the input of subjective assumptions.  When valuing more complex warrants, options, or other derivative equity instruments, we use a binomial lattice-based option pricing model or Monte Carlo option pricing model, whichever management deems more appropriate under the circumstances. Recognition in stockholders’ equity and expense of the fair value of stock options awarded to employees is on the straight-line basis over the requisite service period.  Subsequent changes in fair value are not recognized.

 

Net Loss per Share

 

Basic net income or loss per share is computed by dividing the net income or loss for the period by the weighted average number of shares of Common Stock outstanding for the period. Diluted income per share reflects the potential dilution of derivative securities by including other potential issuances of Common Stock including shares to be issued upon exercise of options and warrants and upon conversion of convertible debt. Potentially dilutive shares are not included in the event of a loss as the effect of doing so would be anti-dilutive. As of March 31, 2016, options to purchase 794,816 shares, and warrants to purchase 550,434 shares of our Common Stock have been excluded from the calculation of diluted loss per share, as their effect would have been anti-dilutive. As of March 31, 2015, options to purchase 765,590 shares and warrants to purchase 276,513 shares of our Common Stock, and 467,500 shares issuable upon the conversion of convertible notes payable have been excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive.

 

  

NOTE 3 - LIABILITIES ARISING FROM REVERSE MERGER

 

Liabilities arising from the reverse merger represent long term real estate leases which had been abandoned, general unsecured liabilities, commercial liens, and tax liens filed with various states all associated with the Company’s pre-reverse merger operations, which were unknowingly assumed in the March 2011 reverse merger transaction. The statute of limitations for most of such liabilities is five years and for most liens is ten years, subject to renewal at the lien holders’ option, depending upon the jurisdiction.  Although the liens accrue interest at between 8% and 12% per year, the Company has ceased accruing interest as it believes the liability recorded to date is adequate to cover the ultimate claims that may, one day, be presented. Liabilities not associated with a lien have been accrued based upon management’s estimation of the amount to be paid.  Liabilities associated with a lien have been accrued at face value.  Management believes all such liabilities have been indemnified by Pegasus Funds, LLC (and/or its affiliates or related parties, "Pegasus") to which (including its assigns) the Company issued 534,654 shares of its Common Stock as part of the reverse merger transaction.  However, as the Company is obligor, the Company has recorded the liability.  To date, only one lien holder has approached the Company concerning payment.  Such lien holder is pursuing the former management of the Company first through litigation.  To the extent such lien holder recovers the liability from the former management, the lien against the Company will be reduced.

 

In March 2015, the Company entered into a settlement agreement with Pegasus regarding its indemnification of the Company in regards to the legacy liabilities. In the settlement agreement, the Company agreed to accept the return of 215,154 shares of the original 534,654 shares of its Common Stock issued to Pegasus and its principals and affiliates in acquiring the shell company, Kupper Parker Communications, Inc., which later became Principal Solar, Inc. As the shares of Common Stock were initially issued in a common stock for preferred stock share exchange with Pegasus, the shares returned by Pegasus will be cancelled without further accounting recognition. The cancellation of 50,000 of the shares was effected in December 2015, and the remaining will be recognized for accounting purposes once they are received from Pegasus.

 

In the settlement with Pegasus, the Company preserved its rights to pursue the individual(s) serving as officers of Kupper Parker Communications, Inc. who, prior to the exchange of shares, had agreed in the Exchange Agreement to "satisfy and assume liability for the payment of any additional liabilities not identified" in the agreement. In April 2015, the Company filed a lawsuit against the remaining individual serving as an officer of Kupper Parker Communications, Inc. prior to the exchange of shares seeking an amount of $991,371 plus accruing interest and legal fees. Any recovery from the lawsuit is uncertain at this time, and such recovery would in no way diminish our potential obligation to third parties.

 

 
10

 

 

NOTE 4 - COMPENSATION PAYABLE

 

Certain members of the management team have deferred payment of their compensation for the benefit of the Company.  No interest is accrued on such deferral and no formal terms of payment have been established. 

 

 

 

NOTE 5 - DISPOSAL OF ASSETS

 

Disposition of Principal Sunrise V (aka IS 42)

 

The Company is negotiating to assign its interest in Principal Sunrise V to a buyer contingent upon the assignee's ability to secure the necessary tax equity and debt financing (approximately $108 million combined) to build and operate the project. Tax equity is defined as temporary equity invested whose primary source of return is monetizing the tax attributes of the underlying investment ("tax equity"). The parties have selected a date of June 30, 2016, to secure the financing and close the transaction, and such date may be extended by the parties. If completed, under the assignment agreement the Company would be repaid its cumulative investment through the closing date ($5.1 million at March 31, 2016) and a separate development fee up to $4.0 million. As a part of the assignment, the Company guaranteed the assignee a 10% after-tax rate of return, with any deficit being deducted from the development fee to be received by the Company. Due to its variable nature, the ultimate development fee received by the Company is expected to range between $0 and $4 million to be paid incrementally between closing and COD as the costs to construct the project become more certain. As a part of the transaction, the assignee has agreed to fund a portion of the development costs between signing and closing through a loan to the Company of up to $333 thousand, and the project seller has agreed to be paid their balance due at closing, both lessening the monthly cash burden to the Company.

 

There can be no assurance the assignment of Principal Sunrise V will be closed or closed upon the terms described above, and failure to close or to close timely would result in a loss of the Company's investment to date.

 

 

NOTE 6 - NOTES PAYABLE

 

Acquisition Note Payable

 

On June 17, 2013, Powerhouse One, LLC secured financing of $5,050,000 from Bridge Bank, National Association ("Bridge Bank") to acquire the membership interest (and the underlying solar arrays) of co-sellers, Vis Solis, Inc., a Tennessee limited liability company, and AstroSol, Inc., a Tennessee corporation. The note bore a fixed interest rate of 7.5% annually. In August 2015, as a part of the disposal of Powerhouse One, all principal and interest pursuant to the Acquisition Note Payable was paid in full.

 

In conjunction with the acquisition note payable, warrants to purchase 37,763 shares of Common Stock were issued to Bridge Bank with an exercise price of $4.00 and a contractual life of 10 years. The value of the warrants issued in connection with this debt, as determined using the Black-Scholes model, was $81,449 and was recorded as a discount to the debt. Amortization expense was $0 and $5,091 for the three months in 2015 and 2014, respectively.

 

The Bridge Bank warrants have cashless exercise rights, redemption rights providing the Company the right to redeem the warrants for $604,200, anti-dilution rights associated with subsequent offerings of equity securities, a term expiring on the first to occur of (i) the 10 year anniversary of the grant, (ii) the closing of the Company’s initial public offering, or (iii) the liquidation of the Company (each a “Termination Event”). In each case, unless exercised earlier, the warrants are automatically exercised on a cashless basis upon a Termination Event.  The Company also provided the holder registration rights in connection with the grant of the warrants.

 

Convertible Debenture (Alpha)

 

On March 2, 2015, the Company entered into a convertible debenture with Alpha to borrow $1,250,000. In August 2015, all principal and interest pursuant to the convertible debenture was paid in full. Amortization of the discount and interest expense recognized during the three months in 2015 totaled $209,722.

 

 
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Notes Payable, Related Parties

 

In June 2014, the Company issued convertible notes of $250,000 each to two of its Board members, Messrs. Heller and Marmol, to fund deposits on potential future acquisitions. In August 2015, all principal and interest pursuant to the convertible notes were paid in full.

 

In December 2014, Michael Gorton, the Company's Chief Executive Officer, loaned to the Company pursuant to a convertible note $130,000. In August 2015, all principal and interest pursuant to the convertible note was paid in full.

 

In March 2016, a trust maintained by a contractor to the Company made a short-term unsecured loan to the Company in the amount of $300,000 under a short-term promissory note. The note bore a flat fee of $45,000 that was recorded as interest expense, and matures on June 24, 2016. Amounts outstanding beyond the maturity date bear interest at a rate of 12% per annum. Proceeds from the loan were used primarily for development costs of Principal Sunrise V.

 

Interest expense for the notes payable, related parties, recognized during the three months in 2016 and 2015 totaled $45,000 and $18,641, respectively.

 

Convertible Note Payable, Non-Related Party

 

In January 2015, the Company issued a convertible note to an unrelated party in the amount of $50,000. In August 2015, all principal and interest pursuant to the convertible note was paid in full. Interest expense for the notes payable, non-related party, recognized during the three months in 2015 totaled $1,266.

 

Arowana Notes

 

Additional Projects

 

On August 20, 2015, the Company issued a promissory note and security agreement to Arowana International Limited ("Arowana") in the original principal amount of $1,600,000. The note matures on December 31, 2016, and bears simple interest at the rate of 6% per annum (the "Arowana Note"). The note is convertible, at the option of the holder, into membership interests in our Principal Sunrise V project based upon a valuation not yet determinable.

 

The Company used the proceeds from the Arowana Note to make investments in two additional projects totaling 68MW AC ("Additional Projects"). The first of the two projects, 34.2MW AC in North Carolina, should begin construction in the second quarter of 2016 and is expected to be completed in the fourth quarter of 2016. The second of the two projects, 33.8 MW AC also in North Carolina, is approximately 6 weeks behind the first. The Additional Projects serve as collateral for the Company’s obligations under the Arowana Note, which is otherwise unsecured and non-recourse to the Company.

 

Arowana continues to fund the development costs of the Additional Projects and, at March 31, 2016, the cumulative investment in the Additional Projects totaled $7.8 million, and the balance of the Arowana Note was $7.9 million, including interest. There can be no assurance Arowana will continue funding the two projects and failing to do so could, depending upon the finality, timing, and proceeds from the assignment of Principal Sunrise V, could cause the related power purchase agreements to be in default, resulting in a loss of all amounts invested to date.

 

Principal Sunrise V

 

Effective November 25, 2015, the Company issued a promissory note to Arowana in the principal amount of $269,688. The note matures on December 31, 2016, and bears simple interest at the rate of 12% per annum (the "Second Arowana Note").

 

The Company used the proceeds from the Second Arowana Note to make an interconnection payment for Principal Sunrise V, and the note is secured by proceeds from the expected disposition of the project.

 

 
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NOTE 7 - COMMISSIONS PAYABLE

 

Carlyle Capital Markets, Inc.

 

In December 2013, the Company engaged Carlyle Capital Markets, Inc. and its affiliate, Friedman, Luzzatto & Co. (together "CCMI"), to assist it in identifying sources of and securing financing for its solar projects to be built. CCMI is a firm of three professionals having its sole office in Dallas, Texas and, though having a similar name, is not affiliated with the well-known and respected firm, The Carlyle Group, headquartered in Washington, D.C.

 

In more than 20 months, CCMI was unable to arrange financing of any type or amount and was unable to even generate enough interest to produce a financing proposal from a prospective investor or lender. With CCMI failing its promise, the Company raised money on its own to maintain operations and further its solar development efforts. Despite CCMI's failure to secure even a single financing proposal (let alone a proposal acceptable to the Company), and despite CCMI having no involvement in non-project related financing efforts undertaken by the Company, CCMI claimed an entitlement to extensive fees.

 

Initially set for arbitration in February 2016, the parties mediated the matter instead in November 2015 and settled with the Company paying CCMI $1.7 million in connection with the August 2015 assignment of Principal Sunrise IV. Funds to pay the settlement came from the $2.5 million escrow deposit established concurrent with the assignment of the project. Additionally, the Company agreed to pay CCMI 10% of any proceeds from financing or disposition of Principal Sunrise V (aka IS 42), should such event take place on or before July 30, 2016. The Company had accrued a Commission payable of $600 thousand at December 31, 2015, based upon its expected proceeds from the disposition of Principal Sunrise V, and funds to pay this later amount are expected to come from the financing or disposition of Principal Sunrise V.

 

Vis Solis, Inc.

 

In November 2014, the Company entered into a services agreement (the “Services Agreement”) with Vis Solis, Inc. ("VIS"), the minority interest holder of our former Powerhouse One subsidiary, wherein VIS would refer to the Company "economically viable solar generation projects" for acquisition; identify and source engineering procurement and construction firms; identify and source operations and maintenance contractors; among other things necessary to build, own, and operate solar projects. In exchange for its services, VIS would be compensated from the construction and permanent financing arranged by the Company based upon the installed kilowatts of each project the Company accepted, took under contract, and put into commercial operation. Any compensation owing to VIS from the Company under the Services Agreement would be due either at the project’s "Financial Close" or its COD.

 

In August 2015, the Company assigned its contractual rights to develop, finance, and put into commercial operation its project Principal Sunrise IV to Carolina Energy Partners II, LLC (“CEP”) as the Company had been unable to arrange either construction or permanent financing for this project.

 

In January 2016, the Company and VIS mediated the matter and reached a settlement wherein the Company will pay VIS $900 thousand to settle all matters between the parties and terminate the original agreement. As a part of its gain on sale and assignment of assets, the Company had accrued a commission payable of $900 thousand at December 31, 2015, and funds to pay such amount are expected to come from the earlier of COD of Principal Sunrise IV (upon which the Company expects to receive $1.6 million) or the disposition of Principal Sunrise V, if any.

 

 

NOTE 8 - MEDIATION SETTLEMENT

 

TCH Principal Solar, LP

 

In March 2015, TCH Principal Solar, LP ("TCH") made two equity investments in our Common Stock (March 5th and 25th) of $500 thousand each. In September 2015, it notified the Company it had realized the Company had completed an issuance of debt securities to Alpha, including warrants, immediately before its first equity investment in March and that TCH wanted an "equal deal" despite the disparity of security instruments and other terms. The Company responded to the notice with a list of questions and such questions went unanswered by TCH.

  

 
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In January 2016, TCH demanded mediation to resolve the matter and the mediation occurred on March 3, 2016. The parties have agreed the Company would pay TCH an amount of $300 thousand and 10% of the proceeds from the disposition of Principal Sunrise V, if and when such occurs, with the total payment not to exceed $800 thousand. The Company had accrued an $800 thousand Mediation settlement at December 31, 2015, and funds to pay such amount are expected to come from proceeds from the disposition of Principal Sunrise V.

 

 

NOTE 9 - LEASES

 

The Company's solar array sits on a rooftop subject to a service agreement with initial terms equal to the energy sales agreement and having one or more renewal options. There are no separate rental payments in the case of rooftop installations. The Company's current solar array installations is as follows:

 

Installation

Location

kW

Date

Term

Rent

SunGen StepGuys

Alfred, ME

110

Sep 2009

25 yr. +

None

        2 - 25-yr renewals  

 

Rent expense for Powerhouse One was $6,645 during the three months in 2015.

 

In each case, the Company is obligated to remove such installations at the end of the lease terms. As the expected termination dates are decades off, there is little experience de-installing solar arrays anywhere in the world, and costs are expected to be minimal, such removal costs have not been separately accounted for.

 

 

 

NOTE 10 - DERIVATIVE LIABILITY ON WARRANTS

 

On March 2, 2015, the Company issued warrants to purchase 234,375 shares of Common Stock with a 66-month contractual term to Alpha in connection with the issuance of convertible debentures (See NOTE 6 "Convertible Debenture (Alpha)"). The warrants were immediately exercisable into the Company’s Common Stock with an exercise price of $6.00 per share.

 

However, as the warrants had “down round” protection, they were treated as a derivative liability and were valued each period using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink® and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time all impacted the value of these warrants. On May 6, 2015, the Company issued Series A Preferred stock (NOTE 11 “Preferred Stock”) resetting the exercise price of the warrants to $4.00 per share, and the valuation was updated and reflected in the balance sheet.

 

Input assumptions on the issuance date were as follows:

 

Estimated fair value

  $ 6.77  

Expected life (years)

    5.51  

Risk free interest rate

    1.65 %

Volatility

    146.11 %

 

In this issuance of convertible debentures and warrants, completed as a result of arm's length negotiations between unrelated parties, the value of the warrants alone exceeded the proceeds received. The Company's need for ongoing financing made the transaction attractive, despite the economics of the transaction. The application of GAAP, resulted in a loss on the date of issuance of $336,884, offset by a subsequent gain of $317,669 stemming from the subsequent movement in the price of our Common Stock, together resulting in a net gain on derivative liability warrants of $19,215 for the period ended March 31, 2015.

 

 

NOTE 11 – CAPITAL STOCK

 

Preferred Stock

 

At December 31, 2015, the Company had authorized 2,000,000 shares of $.01 par value Class A preferred stock.

 

 
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Common Stock

 

At December 31, 2015, the Company had authorized 15,000,000 shares of $.01 par value Common Stock, and it trades on the OTC Pink® under the symbol “PSWW.”  Holders of our Common Stock are entitled to one vote per share and receive dividends or other distributions when, and if, declared by our Board of Directors.  In addition to shares outstanding, we have reserved 966,090 shares for issuance upon exercise of equity incentive awards with options to purchase 794,816 shares of Common Stock outstanding at March 31, 2016.

 

Restricted Stock

 

In January 2015, the Company awarded to an engineering firm, in exchange for its services on Principal Sunrise IV, 12,500 restricted shares pursuant to the 2014 Equity Incentive Plan. The value of the shares on the date of grant totaled $37,500 and the amount was capitalized as construction in progress.

 

Stock Options

 

The Company maintains the 2014 Equity Incentive Plan (the "Plan"), pursuant to which 794,816 of the total 966,090 shares of Common Stock reserved have been issued to date. The exercise of options, if any, will result in the issuance of new share by the Company.

 

2016 Issuances

 

There have been no issuances in 2016.

 

2015 Issuances

 

In February 2015, the Company granted options to purchase 6,250 shares of Common Stock having an exercise price of $6.00 per share, a 10-year term, and immediate vesting to each of five directors as a discretionary bonus. The Company also granted in February 2015, options to acquire 6,000 shares of Common Stock to each of two advisors. The options have an exercise price of $6.00 per share, immediate vesting, and expiration dates extending to 5-years based upon their continued service of two years from the grant date. Finally, the Company granted to a consultant in February 2015, options to acquire 6,250 shares of Common Stock. The options have an exercise price of $6.00 per share, immediate vesting, and expiration dates extending to 10-years based upon continued service of three years from the date of grant.

 

In each case above, the options were valued using the Black-Scholes model, and the resulting equity-based compensation expense included in general and administrative expense was $0 and $37,500 for the periods ended March 31, 2016 and March 31, 2015, respectively.

 

As the Company does not have a significant history of post vesting exercises to estimate an expected life of the option, the simplified method was used wherein the expected life becomes the mid-point of the options vesting date and their contractual life. The valuation of all of the option issuances in 2015 were based upon the following parameters:

 

Estimated fair value

    $6.00  

Expected life (years)

  2.5 to 5.0

Risk free interest rate

  .052% to 1.58%

Volatility

  146% to 207%

 

 

As the Company does not have a significant history of post vesting exercises to estimate an expected life of the option, the simplified method was used wherein the expected life becomes the mid-point of the options vesting date and their contractual life.

 

 
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Warrants

 

The Company had 550,434 warrants outstanding at March 31, 2016, with a weighted average term of 4.3 years and a weighted average exercise price of $5.86 per share.

 

 

 

NOTE 12 - NONCONTROLLING INTEREST

 

Prior to its sale effective July 1, 2015, the original owners of Powerhouse One continued to own approximately 11% of the membership interest of the limited liability company. The noncontrolling interests of equity investors in Powerhouse One was reported on the consolidated balance sheet and statement of operations as "Noncontrolling interest in subsidiary" ("noncontrolling interest") and reflected their respective interests in the equity and the income or loss of the limited liability company.

 

 

NOTE 13 – RELATED PARTY TRANSACTIONS

 

Other than the Board member options described herein in a NOTE 11 "Stock Options”, and the issuance of convertible notes described herein in the NOTE 6 "Notes Payable, Related Parties", no other related party transactions occurred during 2016 and 2015.

 

  

NOTE 14 - TAXES

 

Our estimated $13.3 million federal income tax net operating loss carryover expires over the period from 2030 through 2035. Our federal and state income tax returns are not under examination by any taxing authorities and no statute extensions have been granted; therefore, only our December 31, 2012 to 2015 tax returns are subject to examination.

 

Management has evaluated all tax positions and determined that no uncertain tax positions exist at this time. As a result, no amounts have been recorded related to a tax position more likely than not to be sustained. The Company classifies interest and penalties related to income taxes, if any, as interest expense and general and administrative costs, respectively, in our consolidated financial statements.

 

The Company has established a valuation allowance to fully reserve the net deferred tax assets for all periods due to the uncertainty of the timing and amounts of future taxable income.

  

 

NOTE 15 - COMMITMENTS AND CONTINGENCIES

 

Contingent Obligation

 

In connection with the assignment of Principal Sunrise IV (see NOTE 5 "DISPOSAL OF ASSETS"), the Company became contingently liable to the solar project's original developer in the amount of $600,000, if and only if the assignee of the Company's rights to that project fails to pay the original developer a like amount at the commercial operation date. No liability has been recorded in the financial statements as the failure of the assignee to pay the amount when due is not probable.

 

Stueben Investment

 

Effective June 14, 2013, the Company entered into a Subscription Agreement with Steuben Investment Company II, L.P. (“Steuben”).  Pursuant to the subscription agreement, Steuben purchased 727,273 shares of the Company’s Common Stock for an aggregate of $1,600,000 or $2.20 per share. As additional consideration in connection with the subscription, the Company granted Steuben warrants to purchase 545,455 shares of the Company’s Common Stock with an exercise price of $4.00 per share and a term of 10 years.  The Company also provided Steuben registration rights whereby the Company was required to file a registration statement and take all necessary actions to maintain the availability of Rule 144 for a period of two years following its effective date. The registration statement became effective on February 3, 2015.

 

In the event we fail to take all necessary actions to enable Steuben to sell shares pursuant to Rule 144, we may have to pay to Steuben penalties totaling $216,000 which could have a material adverse effect on our available cash, limit our ability to raise capital, and negatively impact our results of operations. The Company has not accrued a liability for this potential penalty, as it believes the payment of any such penalty is not probable.

 

 
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NOTE 16 - SUBSEQUENT EVENTS

 

Note Payable, Related Party

 

In April 2016, a trust maintained by the Company's Director, Guillermo Marmol, made a short-term unsecured loan to the Company in the amount of $200,000. The promissory note bore a fee of 15% of the face amount, matures at the earlier of i) the financial closing of the disposition of Principal Sunrise V, ii) the receipt of remaining amounts due from the August 2015 assignment of Principal Sunrise IV, or iii) July 29, 2016. Amounts outstanding beyond the maturity date bear interest at a rate of 10% compounded daily. Proceeds were used primarily to pay development costs of the Principal Sunrise V project.

 

The note is i) subordinated to payment of amounts due under that certain settlement reached with Vis Solis (See NOTE 7 Commissions Payable - Vis Solis); ii) pari pasu to repayment of amounts outstanding under that certain promissory note with a trust maintained by a contractor to the Company; and iii) senior to all other unsecured debts of the Company.

 

 
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ITEM 2   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This Item 2 should be read in the context of the information included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and elsewhere in this Quarterly Report, including our financial statements and accompanying notes in Item 1 of this Quarterly Report.

 

BUSINESS

 

Historically, our business plan has been to acquire, build, own, and operate profitable, large-scale solar generation facilities (collectively, "solar development"). The Company has failed to secure sufficient project financing to build large-scale solar generation facilities as planned, and is not considering any new large utility-scale solar projects at this time. Currently, the Company is negotiating to assign its interest in its Sunrise V (IS 42) project in order to create liquidity or otherwise remove obligations of the Company regarding current projects. The consummation of any agreement is subject to entering into a separate construction contract, and final closing is subject to the buyer securing financing and other conditions, some of which may be beyond the Company’s control. If all of the conditions are satisfied, the consummation of the assignment is expected to occur in the second quarter of 2016. Failure to complete the dispositions, or complete them on expected terms, could cause the Company to lose its cumulative investment in one or more of the projects and cause it to cease operations.

  

COMPARISON OF OPERATING RESULTS

(all amounts rounded to the nearest thousand)

 

Three Months Ended March 31 2016 and 2015

 

Power generation revenue was $5 thousand in 2016 compared to $184 thousand in 2015, a decrease of $179 thousand; and total costs of revenues was $5 thousand compared to $128 thousand in 2015, a decrease of $123 thousand. Both decreases are due primarily to the sale of our Powerhouse One subsidiary effective July 1, 2015.

 

The decrease in general and administrative expenses of approximately $642 thousand was comprised of:

 

 

a net decrease of $370 thousand in equity compensation as 2015 included a general grant of options to management and Board members and advisors resulting in a non-cash expense of $335 thousand; further reduced by the $35 thousand of amortization that ended in 2015

 

a net decrease in consulting fees of $164 thousand resulting from the reimbursement of fees incurred for individuals working on the additional projects on behalf of the secured lender

 

a net decrease of $73 thousand in legal, investor relations, and filings fees incurred in 2015 in anticipation of a public offering later withdrawn

 

Results of operations were also impacted significantly from the following:

 

 

a net decrease in interest expense of $202 thousand resulting primarily from the repayment in August 2015 of related party notes saving $37 thousand; repayment of the acquisition note payable to Bridge Bank in August 2015 saving $85 thousand; a decrease of interest expense of $201 thousand reflecting the amortization of the discount on debt (primarily convertible debentures); an increase resulting from a new promissory note with Arowana incurring $86 thousand; and a fee of $45 thousand resulting from a new related party note

  

 

COMPARISON OF BALANCE SHEETS

(all amounts rounded to the nearest thousand)

 

Significant changes in the balance sheet between March 31, 2016, and December 31, 2015, include the following:

 

 

Construction in progress increased by $3.2 million between December 2015 and March 2016 to $12.8 million reflecting further development of Principal Sunrise V and the additional projects. Related, Arowana note payable has increased by $2.3 million reflecting their continued funding of the additional projects.

 

Interest payable has increased by $131 thousand reflecting additional accruals on the Arowana note payable ($86 thousand) and a fee related to a new note payable, related party ($45 thousand).

 

Accrued expenses of $205 thousand is composed primarily of accrued legal fees incurred in connection with financing the construction in progress ($179 thousand); and fees incurred in connection with our public filings ($13 thousand) and mediation ($8 thousand)

 

Accounts payable and compensation payable have both increased, $537 thousand and $33 thousand, respectively resulting from the Company's lack of funding

 

 
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LIQUIDITY AND CAPITAL RESOURCES

 

Sources of Liquidity and Trends In Liquidity

 

In August 2015, the Company sold its primary source of revenue, Powerhouse One representing 96% of its historical revenues. Also, in August 2015, the Company assigned its interest in its most advanced solar project then under development, Principal Sunrise IV. Proceeds from these two transactions, approximately $11.6 million, was used to repay debts, repay other current obligations, fund the continued development of Principal Sunrise V, and fund ongoing administrative needs. Still, the company has significant negative working capital.

 

Stemming from its assignment of Principal Sunrise IV in August 2015, the Company is owed $1.6 million by the assignee and it is payable at the project's commercial operation date ("COD"). The project is expected to reach COD in June 2016.

 

The Company is negotiating to assign its interest in Principal Sunrise V to a buyer contingent upon the assignee's ability to secure the necessary tax equity and debt financing (approximately $108 million combined) to build and operate the project. Tax equity is defined as temporary equity invested whose primary source of return is monetizing the tax attributes of the underlying investment ("tax equity"). The parties have selected a date of June 30, 2016, to secure the financing and close the transaction, and such date may be extended by the parties. If completed, under the assignment agreement the Company would be repaid its cumulative investment through the closing date ($5.1 million at March 31, 2016) and a separate development fee up to $4.0 million. As a part of the assignment, the Company guaranteed the assignee a 10% after-tax rate of return, with any deficit being deducted from the development fee to be received by the Company. Due to its variable nature, the ultimate development fee received by the Company is expected to range between $0 and $4 million to be paid incrementally between closing and COD as the costs to construct the project become more certain. As a part of the transaction, the assignee has agreed to fund a portion of the development costs between signing and closing through a loan to the Company of up to $333 thousand, and the project seller has agreed to be paid their balance due at closing, both lessening the monthly cash burden to the Company.

 

There can be no assurance the assignment of Principal Sunrise V will be closed or closed upon the terms described above, and failure to close or to close timely would result in a loss of the Company's investment to date.

 

The above two items represent the Company's total expected near-term funding, against which settlements, debt repayment, and other obligations range between $3.2 and $4.7 million leaving the Company with funds estimated to range between $1.8 million and $7.3 million to potentially develop and execute a new business strategy. Unlike in prior periods, the Company considers it unlikely that it will raise additional funds through the sale of debt or equity securities in the near term.

 

OFF-BALANCE SHEET ARRANGEMENTS 

 

Principal Sunrise V (aka IS 42)

 

On March 2, 2015, the Company entered into a Membership Interest Purchase Agreement ("MIPA") with Innovative Solar Systems, LLC, a solar developer operating primarily in North Carolina, to acquire Innovative Solar 42, LLC ("IS 42"), the owner of a 72.9mw AC solar project to be built in Fayetteville, North Carolina. PSI agreed to pay Innovative Solar Systems, LLC $5,832,000 for 100% of the membership interest of IS 42 in a series of payments between execution of the MIPA and the financial close, and a total of $1.5 million has been paid to date. As a part of the potential disposition of IS 42, the seller has agreed to defer all remaining payments to a cumulative amount of 90% of the purchase price to financial close, with the remaining 10% paid at COD. Failure by the Company to make any of the future payments may result in the loss of all payments made to date.

  

 
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CRITICAL ACCOUNTING POLICIES

 

We use estimates throughout our statements and changes in estimates could have a material impact on our operations and financial position. We consider an accounting estimate to be critical if: (1) the estimate requires us to make assumptions about matters that are highly uncertain at the time the estimate is made or (2) changes in the estimate are reasonably likely to occur from period to period, or use of different estimates we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

 

There have been no changes in the critical accounting policies disclosed in our Annual Report on Form 10-K filed April 14, 2016.

    

ITEM 3       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our primary market risk is the continued acceptance of our debt and equity securities, the sale of which is necessary to finance our administrative and acquisition-related needs. See "Liquidity and Capital Resources" in Item 2 herein. There have been no changes in management's assessment of its risk as disclosed in our Annual Report on Form 10-K filed April 14, 2016.

 

ITEM 4       CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized, and reported within the time period specified in the SEC's rules and forms and is accumulated and communicated to the Company's management, as appropriate, in order to allow timely decisions in connection with required disclosure.

 

Evaluation of Disclosure Controls and Procedures

  

The Company's principal executive officer and its principal financial officer carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2016, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the appropriate management on a basis that permits timely decisions regarding disclosure. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded the Company's disclosure controls and procedures as of March 31, 2016, were effective.

 

Changes In Internal Controls Over Financial Reporting

 

There were no changes in our internal controls over financial reporting during the period ended March 31, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

Limitations on the Effectiveness of Controls

 

The Company’s disclosure controls and procedures provide the Company’s Chief Executive Officer and Chief Financial Officer with reasonable assurances that the Company’s disclosure controls and procedures will achieve their objectives. However, the Company’s management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within the Company’s company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future.

 

 
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We are a smaller reporting company and are required to comply with the internal control reporting and disclosure requirements of Section 404 of the Sarbanes-Oxley Act for fiscal years ending on or after July 15, 2007. Although we are working to comply with these requirements, we have limited financial personnel making compliance with Section 404 - especially with segregation of duty control requirements – very difficult, if not impossible, and cost prohibitive. While the SEC has indicated it expects to issue supplementary regulations easing the burden of Section 404 requirements for small entities like us, such regulations have not yet been issued.

 

 
21

 

 

PART II

 

ITEM 1       LEGAL PROCEEDINGS

 

Legacy Liabilities

 

Liabilities arising from the reverse merger represent long term real estate leases which had been abandoned, general unsecured liabilities, commercial liens, and tax liens filed with various states all associated with the Company’s pre-reverse merger operations, which were unknowingly assumed in the March 2011 reverse merger transaction. The statute of limitations for most of such liabilities is five years and for most liens is ten years, subject to renewal at the lien holders’ option, depending upon the jurisdiction.  Although the liens accrue interest at between 8% and 12% per year, the Company has ceased accruing interest as it believes the liability recorded to date is adequate to cover the ultimate claims that may, one day, be presented. Liabilities not associated with a lien have been accrued based upon management’s estimation of the amount to be paid.  Liabilities associated with a lien have been accrued at face value.  Management believes all such liabilities have been indemnified by Pegasus Funds, LLC (and/or its affiliates or related parties, "Pegasus") to which (including its assigns) the Company issued 534,654 shares of its Common Stock as part of the reverse merger transaction.  However, as the Company is obligor, the Company has recorded the liability.  To date, only one lien holder has approached the Company concerning payment.  Such lien holder is pursuing the former management of the Company first through litigation.  To the extent such lien holder recovers the liability from the former management, the lien against the Company will be reduced.

 

In March 2015, the Company entered into a settlement agreement with Pegasus regarding its indemnification of the Company in regards to the legacy liabilities. In the settlement agreement, the Company agreed to accept the return of 215,154 shares of the original 534,654 shares of its Common Stock issued to Pegasus and its principals and affiliates in acquiring the shell company, Kupper Parker Communications, Inc., which later became Principal Solar, Inc. As the shares of Common Stock were initially issued in a common stock for preferred stock share exchange with Pegasus, the shares returned by Pegasus will be cancelled without further accounting recognition. The cancellation of 50,000 of the shares was effected in December 2015, and the remaining will be recognized for accounting purposes once they are received from Pegasus.

 

In the settlement with Pegasus, the Company preserved its rights to pursue the individual(s) serving as officers of Kupper Parker Communications, Inc. who, prior to the exchange of shares, had agreed in the Exchange Agreement to "satisfy and assume liability for the payment of any additional liabilities not identified" in the agreement. In April 2015, the Company filed a lawsuit against the remaining individual serving as an officer of Kupper Parker Communications, Inc. prior to the exchange of shares seeking an amount of $991,371 plus accruing interest and legal fees. Any recovery from the lawsuit is uncertain at this time, and such recovery would in no way diminish our potential obligation to third parties.

 

Carlyle Capital Markets, Inc.

 

In December 2013, the Company engaged Carlyle Capital Markets, Inc. and its affiliate, Friedman, Luzzatto & Co. (together "CCMI"), to assist it in identifying sources of and securing financing for its solar projects to be built. CCMI is a firm of three professionals having its sole office in Dallas, Texas and, though having a similar name, is not affiliated with the well-known and respected firm, The Carlyle Group, headquartered in Washington, D.C.

 

In more than 20 months, CCMI was unable to arrange financing of any type or amount and was unable to even generate enough interest to produce a financing proposal from a prospective investor or lender. With CCMI failing its promise, the Company raised money on its own to maintain operations and further its solar development efforts. Despite CCMI's failure to secure even a single financing proposal (let alone a proposal acceptable to the Company), and despite CCMI having no involvement in non-project related financing efforts undertaken by the Company, CCMI claimed an entitlement to extensive fees.

 

Initially set for arbitration in February 2016, the parties mediated the matter instead in November 2015 and settled with the Company paying CCMI $1.7 million in connection with the August 2015 assignment of Principal Sunrise IV. Funds to pay the settlement came from the $2.5 million escrow Deposit established concurrent with the assignment of the project. Additionally, the Company agreed to pay CCMI 10% of any proceeds from financing or disposition of Principal Sunrise V (aka IS 42), should such event take place on or before July 30, 2016. The Company had accrued a Commission payable of $600 thousand at December 31, 2015, based upon its expected proceeds from the disposition of Principal Sunrise V, and funds to pay this later amount are expected to come from the disposition of Principal Sunrise V.

 

 
22

 

  

Vis Solis, Inc.

 

In November 2014, the Company entered into a services agreement (the “Services Agreement”) with Vis Solis, Inc. ("VIS"), the minority interest holder of our former Powerhouse One subsidiary, wherein VIS would refer to the Company "economically viable solar generation projects" for acquisition; identify and source engineering procurement and construction firms; identify and source operations and maintenance contractors; among other things necessary to build, own, and operate solar projects. In exchange for its services, VIS would be compensated from the construction and permanent financing arranged by the Company based upon the installed kilowatts of each project the Company accepted, took under contract, and put into commercial operation. Any compensation owing to VIS from the Company under the Services Agreement would be due either at the project’s "Financial Close" or its COD.

 

In August 2015, the Company assigned its contractual rights to develop, finance, and put into commercial operation its project Principal Sunrise IV to Carolina Energy Partners II, LLC (“CEP”) as the Company had been unable to arrange either construction or permanent financing for this project.

 

In January 2016, the Company and VIS mediated the matter and reached a settlement wherein the Company will pay VIS $900 thousand to settle all matters between the parties and terminate the original agreement. As a part of its Gain on sale and assignment of assets, the Company had accrued a Commission payable of $900 thousand at December 31, 2015, and funds to pay such amount are expected to come from the earlier of COD of Principal Sunrise IV (upon which the Company expects to receive $1.6 million) or the disposition of Principal Sunrise V, if any.

 

TCH Principal Solar, LP

 

In March 2015, TCH Principal Solar, LP ("TCH") made two equity investments in our Common Stock (March 5th and 25th) of $500 thousand each. In September 2015, it notified the Company it had realized the Company had completed an issuance of debt securities to Alpha Capital Anstalt, including warrants, immediately before its first equity investment in March and that TCH wanted an "equal deal" despite the disparity of security instruments and other terms. The Company responded to the notice with a list of questions and such questions went unanswered by TCH.

 

In January 2016, TCH demanded mediation to resolve the matter and the mediation occurred on March 3, 2016. The parties have agreed the Company would pay TCH an amount of $300 thousand and 10% of the proceeds from the disposition of Principal Sunrise V, if and when such occurs, with the total payment not to exceed $800 thousand. The Company had accrued an $800 thousand Mediation settlement at December 31, 2015, and funds to pay such amount are expected to come from proceeds from the disposition of Principal Sunrise V.

 

 

ITEM 1A    RISK FACTORS

 

There are no additional risk factors beyond those included in the Annual Report on Form 10-K filed with the SEC on April 14, 2016.   

 

 

ITEM 2       UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Note Payable, Related Parties

 

In March 2016, a trust maintained by contractor to the Company made a short-term unsecured loan to the Company in the amount of $300,000 under a short-term promissory note. The note bore a flat fee of $45,000 that was recorded as interest expense, and matures on June 24, 2016. Amounts outstanding beyond the maturity date bear interest at a rate of 12% per annum. Proceeds from the loan were used primarily for development costs of Principal Sunrise V.

 

 
23

 

 

In April 2016, a trust maintained by the Company's Director, Guillermo Marmol, made a short-term unsecured loan to the Company in the amount of $200,000. The promissory note bore a fee of 15% of the face amount, matures at the earlier of i) the financial closing of the disposition of Principal Sunrise V, ii) the receipt of remaining amounts due from the August 2015 assignment of Principal Sunrise IV, or iii) July 29, 2016. Amounts outstanding beyond the maturity date bear interest at a rate of 10% compounded daily. Proceeds were used primarily to pay development costs of the Principal Sunrise V project.

 

The note with Director Marmol is i) subordinated to payment of amounts due under that certain settlement reached with Vis Solis (See NOTE 7 Commissions Payable - Vis Solis); ii) pari pasu to repayment of amounts outstanding under that certain promissory note with a trust maintained by a contractor to the Company; and iii) senior to all other unsecured debts of the Company.

 

No underwriters were involved in the transactions described above. The Company’s issuance of Common Stock, convertible debt, warrants, and any Common Stock issuable upon conversion or exercise thereof, was, or will be, exempt from registration under the Securities Act of 1933 pursuant to exemptions from registration provided by Rule 506 of Regulation D and Sections 4(2) of the Securities Act of 1933, insofar as such securities were issued only to “accredited investors” within the meaning of Rule 501 of Regulation D. The recipients of these securities took such securities for investment purposes without a view to distribution. Furthermore, they each had access to information concerning the Company and its business prospects. There was no general solicitation or advertising for the purchase of the securities and the securities are restricted pursuant to Rule 144.

  

 

ITEM 6       EXHIBITS

 

The Exhibit Index immediately preceding the exhibits required to be filed with this report is incorporated herein by reference.

  

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

May 19, 2016      

 

 

PRINCIPAL SOLAR, INC. 

 

 

 

(Registrant) 

 

       
       

 

 

/s/ Michael Gorton

 

 

 

Michael Gorton 

 

 

 

Chief Executive Officer 

 

 

 
24

 

 

EXHIBIT INDEX

 

Exhibit  

Number

Description of Exhibit

 

 

2.1(1)

Exchange Agreement (March 7, 2011), Principal Solar (Texas), the Company, the shareholders of Principal Solar (Texas) and Pegasus Funds LLC

 

 

3.1(13)

Certificate of Incorporation (Delaware) (September 27, 2012)

 

 

3.2(13)

Certificate of Ownership and Merger (Delaware) (October 3, 2012)

 

 

3.3(12)

Bylaws

 

 

3.4 (10)

Certificate of Amendment to the Certificate of Incorporation (May 6, 2015)

 

  

4.1(1)

Form of Common Stock Certificate

 

  

4.2(5)

2014 Equity Incentive Plan (June 11, 2014)

 

 

4.3(6)

8% Senior Secured Convertible Debenture due September 2, 2015, with Alpha Capital Anstalt (March 2, 2015)

 

  

4.4(6)

Common Stock Purchase Warrant with Alpha Capital Anstalt (March 2, 2015)

 

  

4.5(17)

Binding Term Sheet to issue up to $2 million in Senior Secured Convertible Debentures dated July 1, 2015

 

  

4.6(20)

Convertible Corporate Promissory Note of $1.6 million with Arowana International Limited (August 20, 2015), as amended

   

10.1(1)

Employment Agreement with Michael Gorton (January 1, 2012)

 

 

10.2(1)

Form of Nonstatutory Stock Option Agreement

 

 

10.3(1)

Form of Nonstatutory Stock Option Grant Notice

 

 

10.4(1)

Employment Agreement with R. Michael Martin

 

 

10.5(1)

Common Stock Warrant to Purchase 151,050 Shares of Common Stock (Bridge Bank) (June 17, 2013)

 

 

10.6(1)

Warrant to Purchase 2,181,818 Shares of Common Stock (Steuben Investment Company II, L.P.) (June 14, 2013)

 

 

10.7(1)

Registration Rights Agreement (Steuben Investment Company II, L.P.) (June 14, 2013)

 

 

10.8(1)

Purchase and Sale Agreement (Powerhouse One, LLC Acquisition) (December 31, 2012)

 

 

10.9(1)

First Amendment to Purchase and Sale Agreement (Powerhouse One, LLC Acquisition) (June 2013)

 

 

10.10(1)

Loan and Security Agreement (Powerhouse One, LLC Acquisition) (June 2013)

 

 

10.11(1)

Pledge and Security Agreement dated June 10, 2013, by and between the Company, Vis Solis, Inc. and AstroSol, Inc. in favor of Bridge Bank

 

 

10.12(1)

Guaranty dated June 10, 2013 by the Company in favor of Bridge Bank

 

 

10.13(1)

Consulting Agreement with Carlyle Capital Markets, Inc. (December 4, 2013)

 

 
25

 

 

10.14(2)

Letter Agreement with Steuben Investment Company II, L.P. Regarding Registration Rights Agreement Penalties (February 5, 2014)

   

10.15(2)

Professional Services Agreement with DNP Financial, LLC (January 14, 2014)

 

  

10.16(2)

Form of Generation Partners Amended and Restated Pilot Extended Participation Agreement (power purchase agreement)

 

  

10.17(3)

Form of Convertible Corporate Promissory Note (Secured) with Messrs. Heller and Marmol (June 5, 2014)

 

  

10.18(3)

Form of Corporate Security Agreement with Messrs. Heller and Marmol (June 5, 2014)

 

  

10.19(4)

Amendment #1 to Registration Rights Agreement (October 7, 2014)

 

  

10.20(5)

Membership Interest Purchase Agreement with Innovative Solar Systems, LLC re Innovative Solar 46, LLC (November 6, 2014)

 

  

10.21(5)

Warrant Exercise Agreement with Steuben Investment Company II, L.P. (November 1, 2014)

 

  

10.22(5)

Form of Note and Security Modification Agreement re Corporate Convertible Promissory Note (Secured) with Messrs. Heller and Marmol (December 5, 2014)

 

  

10.23(5)

Form of Stock Option Notice and Agreement

 

  

10.24(6)

Securities Purchase Agreement with Alpha Capital Anstalt (March 2, 2015

 

  

10.25(6)

Security Agreement with Alpha Capital Anstalt (March 2, 2015)

 

  

10.26(6)

Subsidiary Guaranty with Alpha Capital Anstalt (March 2, 2015)

 

  

10.27(9)

Engineering, Procurement and Construction Agreement between Principal Solar, Inc. and Alpha Technologies Services (April 27, 2015)

 

  

10.28(11)

Membership Interest Purchase Agreement with Innovative Solar Systems, LLC re Innovative Solar 42, LLC (March 2, 2015)

 

  

10.29(13)

Purchase and Sale Agreement with SMCDLB, LLC re Series A Preferred Stock (May 15, 2015)

 

  

10.30(13)

Warrant to Purchase Common Stock issued to SMCDLB, LLC (May 15, 2015)

 

  

10.31(13)

Form of Note and Security 2nd Modification Agreement re Corporate Convertible Promissory Note (Secured) with Messrs. Gorton, Heller, and Marmol (May 11, 2015)

 

  

10.32(8)

Binding Term Sheet re Joint Development Agreement by and between Principal Solar, Inc. and Energy Surety Partners, LLC dated June 5, 2015.

 

  

10.33(16)

Binding Term Sheet by and between Principal Solar, Inc. and Innovative Solar Systems, LLC dated June 9, 2015


 

  

10.34(18)

Assignment Agreement among Principal Solar, Inc., Carolina Energy Partners II, LLC, and Innovative Solar Systems, LLC dated August 11, 2015, re the Membership Interest Purchase Agreement to acquire Innovative Solar 46, LLC dated November 6, 2014

 

 

10.35(19)

Purchase and Sale Agreement by and among Principal Solar, Inc. et al (sellers) and Magnolia Sun, LLC (buyer) re the sale of Powerhouse One, LLC (August 18, 2015)

   

10.36*

Promissory Note with Pearl M. Thompson Trust (February 25, 2016)

  

 
26

 

 

10.37*

Promissory Note with G. Marmol and G. Marmol Revocable Trust (April 1, 2016)

   
10.38*     Settlement Agreement and Release of Claims between Principal Solar, Inc. and TCH Principal Solar, LP (May 3, 2016)
 

  

14.1(7)

Code of Business Conduct (March 10, 2015)

 

  

21.1(15)

Subsidiaries of the Registrant

   

31.1*

Certification pursuant to Rule 13a-14(a)/15d-14(a) (Chief Executive Officer and Principal Financial Officer)

 

  

32.1*

Section 1350 Certification (Chief Executive Officer and Principal Financial Officer)

 

  

99.1(1)

Glossary

 

  

101.INS*

XBRL Instance

101.SCH*

XBRL Taxonomy Extension Schema

101.CAL*

XBRL Taxonomy Extension Calculation

101.DEF*

XBRL Taxonomy Extension Definition

101.LAB*

XBRL Taxonomy Extension Labels

101.PRE*

XBRL Taxonomy Extension Presentation

 

* Filed herewith.

 

(1) Filed as exhibits to the Company’s Registration Statement on Form S-1 (File: 333-193058), filed with the Securities and Exchange Commission on December 23, 2013, and incorporated herein by reference.

 

(2) Filed as exhibits to the Company’s Registration Statement on Form S-1/A, Amendment No. 1 (File: 333-193058), filed with the Securities and Exchange Commission on May 2, 2014, and incorporated herein by reference.

 

(3) Filed as exhibits to the Company’s Registration Statement on Form S-1/A, Amendment No. 2 (File: 333-193058), filed with the Securities and Exchange Commission on July 17, 2014, and incorporated herein by reference.

 

(4) Filed as exhibits to the Company’s Registration Statement on Form S-1/A, Amendment No. 4 (File: 333-193058), filed with the Securities and Exchange Commission on October 20, 2014, and incorporated herein by reference.

  

(5) Filed as exhibits to the Company’s Registration Statement on Form S-1/A, Amendment No. 5 (File: 333-193058), filed with the Securities and Exchange Commission on December 22, 2014, and incorporated herein by reference.

 

(6) Filed as exhibits to the Company’s Current Report on Form 8-K/A (File: 333-193058), filed with the Securities and Exchange Commission on March 5, 2015, and incorporated herein by reference.

 

(7) Filed as an exhibit to the Annual Report on Form 10-K (File: 333-193058), filed with the Securities and Exchange Commission on March 17, 2015, and incorporated herein by reference.

 

(8) Filed as exhibits to the Company's Registration Statement on Form S-1/A, Amendment No. 3 (File: 333-203075), filed with the Securities and Exchange Commission on June 5, 2015.

 

(9) Filed as an exhibit to the Company's Current Report on Form 8-K (File: 333-193058) filed with the Securities and Exchange Commission on May 1, 2015, and incorporated herein by reference.

 

(10) Filed as an exhibit to the Company's Current Report on Form 8-K (File: 333-193058) filed with the Securities and Exchange Commission on May 12, 2015, and incorporated herein by reference.

 

 
27

 

 

(11) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q (File: 333-193058) filed with the Securities and Exchange Commission on May 13, 2015, and incorporated herein by reference.

 

(12) Filed as exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File: 333-193058), filed with the Securities and Exchange Commission on December 23, 2013, and incorporated herein by reference.

 

(13) Filed as Exhibits to the Company’s Registration Statement Filed on Form S-1/A, Amendment No. 1 (File: 333-203075), filed with the Securities and Exchange Commission on May 19, 2015.

 

(14) Filed as Exhibits to the Company’s Registration Statements on Form S-1/A, Amendment No. 2 (File: 333-203075), filed with the Securities and Exchange Commission on May 21, 2015.

 

(15) Filed as Exhibits to the Company's Registration Statement on Form S-1/A, Amendment No. 3 (File: 333-203075), filed with the Securities and Exchange Commission on June 8, 2015.

 

(16) Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A, Amendment No. 4 (File: 333-203075), filed with the Securities and Exchange Commission on June 11, 2015.

 

(17) Filed as an exhibit to the Company's Current Report on Form 8-K/A (File: 333-193058) filed with the Securities and Exchange Commission on July 8, 2015, and incorporated herein by reference.

 

(18) Filed as an exhibit to the Company's Current Report on Form 8-K (File: 333-193058) filed with the Securities and Exchange Commission on August 17, 2015, and incorporated herein by reference.

 

(19) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q (File: 333-193058) filed with the Securities and Exchange Commission on August 19, 2015, and incorporated herein by reference.

 

(20) Filed as an exhibit to the Company's Current Report on Form 8-K (File: 333-193058) filed with the Securities and Exchange Commission on August 27, 2015, and incorporated herein by reference.

 

 

28

EX-10.36 2 ex10-36.htm EXHIBIT 10.36 ex10-36.htm

Exhibit 10.36

 

PRINCIPAL SOLAR

PROMISSORY NOTE

 

 

$300,000.00 

 

Date: February 25, 2016 

 

 

Dallas, Texas 

 

FOR VALUE RECEIVED, Principal Solar, Inc., of Dallas, Texas ("Borrower" or "Company"), hereby promises to pay to The Pearl M Thompson Trust dated March 24, 2004 an irrevocable trust for of Matthew A. Thompson, an individual residing at _______ ("Lender"), in lawful money of the United States of America and in immediately available funds, the principal sum of Three Hundred Thousand Dollars ($300,000.00) (the "Loan"), payable on the dates and in the manner set forth below.

 

 

1.

Repayment. The outstanding principal amount of the Loan shall be payable in full on June 24, 2016 ("Maturity Date"), subject to the terms and limitations hereunder. The Borrower may prepay this Note in whole or in part at any time prior to the Maturity Date without the written consent of Lender, at Borrower's sole discretion (a "Prepayment").

 

 

2.

Fee. As consideration for making this loan, Lender shall receive a one-time funding fee in an amount calculated as 15% of the amount advanced.

 

 

3.

Interest Rate. This Promissory Note is non-interest bearing, except for any amounts outstanding beyond the Maturity Date shall earn interest at a rate of 12% per annum.

 

 

4.

Place of Payment. All principal payable hereunder shall be payable to Lender at the address it specifies to Borrower in writing.

 

 

5.

Application of Payments. Any payments on this Note shall be applied to the outstanding principal balance hereof.

 

 

6.

Use of Proceeds. The proceeds from this Note shall be used by Borrower to make a pay amounts due to Duke Energy Progress, Inc. for interconnections and other expenses associated with Borrowers development of Innovative Solar 42, LLC.

 

 

7.

Governing Law. This Note shall be governed by, construed and enforced in accordance with, the laws of the State of Texas, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction. Any action brought to enforce or interpret this Note shall be brought in the courts located in Dallas County, Texas.

  

 
 

 

 

Exhibit 10.36


 

 

8.

Transfers, Successors and Assigns. The provisions of this Note shall inure to the benefit of and be binding on any successor to Borrower and shall extend to any holder hereof; provided, however, that the Lender may not, without the prior written consent of Borrower (such consent not to be unreasonably withheld and such consent not to be required if an Event of Default exists), assign, transfer or negotiate this Note to any Person. Any such transfer or assignment must be in full compliance with applicable securities laws.

 

 

 

IN WITNESS WHEREOF, the Borrower and the Lender have duly executed this Promissory Note as of the date first written above.

 

 

 

BORROWER: 

 

 

LENDER: 

 

Michael Gorton,      Matthew A. Thompson, Trustee for  
CEO Principal Solar, Inc.     The Pearl M. Thompson Trust  
         
         
         

/s/ Michael Gorton

 

 

/s/ Matthew Thompson

 

EX-10.37 3 ex10-37.htm EXHIBIT 10.37 ex10-37.htm

Exhibit 10.37

  

 

PRINCIPAL SOLAR, INC.

 

PROMISSORY NOTE

 

$200,000.00 

 

Date: April 1, 2016 

 

 

 Dallas, Texas

 

FOR VALUE RECEIVED, Principal Solar, Inc., of Dallas, Texas ("Borrower" or "Company"), hereby promises to pay to the G. Marmol and G. Marmol Revocable Trust dated_____________ for the benefit of Guillermo G. Marmol and Gail A. Marmol, individuals residing at ______________ ("Lender"), in lawful money of the United States of America and in immediately available funds, the principal sum of Two Hundred Thousand Dollars ($200,000.00) (the "Loan"), payable on the dates and in the manner set forth below.

 

1.  Repayment. The outstanding principal amount, fee, and interest, if any, of the Loan shall be payable in full at the earlier of (i) financial close of the assignment of Innovative Solar 42, LLC, (ii) the receipt of the "IS 46 COD Payment" (as defined in Exhibit A hereto) resulting from the August 2015 assignment of Innovative Solar 46, LLC, or (ii) July 29, 2016 ("Maturity Date"), subject to the terms and limitations hereunder. The Borrower may prepay this Note in whole or in part at any time prior to the Maturity Date without the written consent of Lender, at Borrower's sole discretion (a "Prepayment"). For purposes of clarity, Lender and Borrower acknowledge that the repayment of the Loan is not conditioned upon the financial close of the assignment of Innovative Solar 42, LLC, nor is the source of funds for the repayment of the Loan limited to such financial close. Failure to pay on or before the Maturity Date shall constitute a default. For purposes of clarification, to the extent any part of the principal amount, fee and interest, if any, of the Loan is outstanding at the time Borrower receives the IS 46 COD Payment, the proceeds of such IS 46 COD Payment shall be used to repay the principal amount, fee and interest, if any, of the Loan.

 

2.  Fee. As consideration for making this Loan, Lender shall receive a one-time funding fee in an amount calculated as 15% of the amount advanced, which fee shall be paid no later the Maturity Date.

 

3.  Interest Rate. This Promissory Note is non-interest bearing, except for any amounts outstanding beyond the Maturity Date shall earn interest at a rate of 10% per annum, compounded daily.

 

4.  Priority. Payment of this Note shall be (i) subordinate to amounts due under that certain Release, Accord And Satisfaction Agreement dated February 8, 2016, between Principal Solar, Inc. and Vis Solis, Inc. et al (ii) to the extent all or any part of the principal amount, fee and interest, if any, of the Loan is outstanding at the time of the maturity date of that certain Promissory Note dated February 25, 2016, between Principal Solar, Inc. and The Pearl M Thompson Trust dated March 24, 2004 (the “PMT Trust Note”), pari pasu to such PMT Trust Note and (iii) senior to all other unsecured debts of Borrower (past, current and future).

 

5.  Place of Payment. All principal payable hereunder shall be payable to Lender at the address it specifies to Borrower in writing.

 

6.  Application of Payments. Any payments on this Note shall be applied first to fees, second to interest due, if any, and lastly to the outstanding principal balance hereof.

  

 
 

 

 

7.  Use of Proceeds. The proceeds from this Note shall be used by Borrower to pay amounts due to Duke Energy Progress, Inc. for interconnections and other expenses associated with Borrowers development of Innovative Solar 42, LLC. Use of less than $190,000 of the proceeds from this Note for any other purpose shall constitute a default of this Note, upon which all unpaid fees, accrued but unpaid interest (if any) and outstanding principal balance hereof shall become immediately due and payable.

 

8.  Governing Law. This Note shall be governed by, construed and enforced in accordance with, the laws of the State of Texas, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction. Any action brought to enforce or interpret this Note shall be brought in the courts located in Dallas County, Texas.

 

9.  Transfers, Successors and Assigns. The provisions of this Note shall inure to the benefit of and be binding on any successor to Borrower and shall extend to any holder hereof; provided, however, that the Lender may not, without the prior written consent of Borrower (such consent not to be unreasonably withheld and such consent not to be required if an Event of Default exists), assign, transfer or negotiate this Note to any Person. Any such transfer or assignment must be in full compliance with applicable securities laws.

 

 

IN WITNESS WHEREOF, the Borrower and the Lender have duly executed this Promissory Note as of the date first written above.

 

 

 

BORROWER: 

 

 

 

LENDER: 

 
  Michael Gorton,        Guillermo G. Marmol, Trustee for  
  CEO Principal Solar, Inc.       G. Marmol and G. Marmol Revocable Trust  
             
             
             
             
 

/s/ Michael Gorton

 

 

 

/s/ Guillermo G. Marmol

 
             
             
 

Dated: __April 1, 2016________________

 

 

 

Dated: _April 18, 2016

 
             

 

 
 

 

 

Exhibit 10.37 

Exhibit A

 

 

The Company is entitled to receive from Carolina Energy Partners II, LLC within 5 days of the commercial operation date ("COD") of the solar project Innovative Solar 46, LLC, the sum of $1,000,000 pursuant to Section 1.5(d) of that certain Assignment Agreement between Principal Solar, Inc.; Carolina Energy Partners II, LLC; Innovative Solar Systems, LLC; and Innovative Solar 46, LLC dated August 11, 2015; and

 

Further, the Company is entitled to receive from Innovative Solar Systems, LLC the sum of $624,000 pursuant to that certain Agreement between Principal Solar, Inc. and Innovative Solar Systems, LLC dated August 11, 2015.

 

The two amounts receivable described above, considered together as a single amount of $1,624,000, defines the term "IS 46 COD Payment" as used in the Promissory Note of which this Exhibit A is a part.

EX-10.38 4 ex10-38.htm EXHIBIT 10.38 ex10-38.htm

Exhibit 10.38


 

SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS

 

This Settlement Agreement and Release of Claims (the “Agreement”) is made and entered into by Turtle Creek Holdings, LLC (“TCH”) and TCH Principal Solar, LP (“TCHPS”) (together, “Turtle Creek”) on the one hand, and Principal Solar, Inc. (“PSI”) and Michael Gorton (“Gorton”) (together the “PSI Parties”) on the other. Turtle Creek and the PSI Parties are collectively referred to in this Agreement as the “Parties.”

 

I.

 

RECITALS

 

A.     Turtle Creek invested approximately $1.0 million in PSI by the purchase of PSI’s common stock in 2015.

 

B.     As a result of that investment, Turtle Creek has asserted certain legal claims against the PSI Parties and is prepared to file a lawsuit against the PSI Parties in pursuit of those claims.

 

C.     The PSI Parties have denied liability for the claims asserted against them. The Parties have agreed to settle their disputes related to Turtle Creek’s investment in PSI without resort to litigation, pursuant to the terms set forth in this Agreement.

 

D.     PSI is in the process of closing the sale of a solar facility it refers to as ISS 42 NC, located in the state of North Carolina (the “ISS 42 Sale”).

 

II.

 

TERMS AND CONDITIONS

 

NOW, THEREFORE, in consideration of the covenants, promises, and releases set forth herein, and in full settlement of all claims between the Parties, the Parties hereby agree on behalf of themselves and any and all of their respective agents, servants, employees, and all persons, natural and corporate, in privity with them, as follows:

 

 

A.

Settlement Consideration

 

 

1.

Upon closing of the ISS 42 Sale, TCH will receive the first $300,000 of net proceeds that would otherwise be paid to PSI. Additionally, TCH will receive ten percent (10%) of the total net proceeds that would otherwise be paid to PSI. The initial $300,000 shall not be counted toward the 10% amount; however, the maximum proceeds payable to TCH is $800,000.1 “Net proceeds” as used herein refers to the total sale price of the ISS 42 Sale, minus any costs and fees incurred as part of the sale.

 

 


1 By way of example, if PSI is to receive net proceeds from the sale of $2 million, TCH will be paid $300,000 plus 10% of $2 million ($200,000), for a total of $500,000; however, if the sale were $6 million, TCH would be paid the maximum payment of $800,000, as the $6 million sale would yield $900,000, but for the $800,000 cap ($300,000, plus 10% of $6 million [$600,000] = $900,000).

 

 
1

 

 

 

2.

All payments due to TCH, as set forth in paragraph A.1. above, shall be directly funded to TCH at the closing of the ISS 42 Sale and shall not be paid to PSI first.

 

 

3.

Upon receiving the amounts set forth above, TCH will return and transfer ownership of all its shares in PSI back to PSI, and the releases set forth below in Sections B.1 and B.2. shall become effective.

 

 

4.

Should the ISS 42 Sale fail to close, then this Agreement shall be void, TCH will retain its shares in PSI, and the releases set forth below in Section B shall not be effective.

 

 

B.

Releases

 

 

1.

Only upon the conditions set forth in Paragraph A.3 above, PSI and Gorton, for themselves and on behalf of all of their present and former principals, employees, staff, predecessors and successors, fully release and discharge TCH and TCHPS, and all of their present and former managers, employees, agents, consultants, attorneys, directors, and officers, and their respective insurers in their capacities as such from any and all claims, demands, damages, liabilities, actions, causes of action or suits at law or in equity, arising out of or relating to the claims asserted or that could have been asserted in any lawsuit relating to TCH’s and TCHPS’s investment in or relationship with PSI.

 

 

2.

Only upon the conditions set forth in Paragraph A.3 above, TCH and TCHPS, for themselves and on behalf of all of their present and former principals, employees, staff, predecessors and successors, fully release and discharge PSI and Gorton, and all of their present and former managers, employees, agents, consultants, attorneys, directors, and officers, and their respective insurers in their capacities as such from any and all claims, demands, damages, liabilities, actions, causes of action or suits at law or in equity, arising out of or relating to the claims asserted or that could have been asserted in any lawsuit relating to TCH’s and TCHPS’s investment in or relationship with PSI.

 

 

C.

General Terms and Provisions

 

 

1.

Representations and Authority to Enter into Agreement. Except as expressly stated herein, the Parties warrant, represent and agree that they: (i) have not assigned, subrogated, pledged or transferred to any person, firm, partnership, corporation or other entity whatsoever any of the claims, counterclaims, actions, demands or causes of action to be released pursuant to the releases set forth in this Agreement; and (ii) are fully authorized to enter into this Agreement without the consent of any third-parties. Specifically, each person signing the Agreement represents and warrants that upon execution of this Agreement, s/he has been authorized and empowered to sign this Agreement on behalf of the Party the person purports to represent and that this Agreement is a lawful and binding obligation of the Party on whose behalf the person is signing.

 

 
2

 

 

 

2.

Good Faith Compromise. This Agreement is entered into as a good faith compromise between the Parties for the complete and final settlement of the claims referred to above. By this settlement, the Parties do not admit liability in any respect, or make any admission as to factual or legal contentions relating to the matters settled herein.

 

 

3.

Execution of Necessary Documents. The Parties further covenant and agree to execute any and all documents reasonably necessary to effectuate the provisions of this Agreement.

 

 

4.

Plain Meaning. The Parties acknowledge that they have had the opportunity to be represented by counsel during negotiations of this Agreement and to consult with their respective attorneys regarding its meaning and effect. The Parties agree that: (a) the terms and provisions of this Agreement are not to be construed more strictly against any of the Parties; and (b) it is their mutual intention that the terms and provisions of this Agreement be construed as having the plain meaning of the terms used herein.

 

 

5.

Execution in Counterparts. This Agreement may be signed in multiple counterparts, and the separate signature pages executed by the Parties may be combined to create a document that is binding on all of the Parties and together shall constitute one and the same instrument.

 

 

6.

Choice of Law. It is understood and agreed that this Agreement shall be governed by, construed, and enforced in accordance with, and subject to, the laws of the State of Texas. Venue shall lie in Dallas County, Texas.

 

 

7.

Headings and Numbering. Any paragraph, article, and/or section headings or paragraph numbers used in this Agreement are for convenience only and shall not affect the construction of the Agreement.

 

 

8.

Severability. If any of the provisions of this Agreement, or the application thereof, shall, for any reason or to any extent, be construed by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement, and application of such provisions to other circumstances, shall remain in effect and be interpreted so as best to reasonably effect the intent of the Parties.

 

 

9.

Amendments. This Agreement may be amended only by a written agreement signed by each of the Parties, and any alleged breach of this Agreement may be waived only by a written waiver signed by the party granting the waiver.

 

 
3

 

 

DATED: May 3, 2016

PRINCIPAL SOLAR, INC.

 

 

By:       /s/ Michael Gorton           

Print Name: Michael Gorton                    

Title: Chief Executive Officer                              

 

 

 

DATED: May 3, 2016

MICHAEL GORTON

 

 

By:      /s/ Michael Gorton            

Print Name: Michael Gorton                         

 

 

 

 

DATED: March 29, 2016

TURTLE CREEK HOLDINGS, LLC 

 

 

By:     /s/ Scott Olson

Print Name: Scott Olson                         

Title:     Member

 

 

 

DATED: March 29, 2016

TCH PRINCIPAL SOLAR, LP

 

 

By:       /s/ Scott Olson     

Print Name: Scott Olson                    

Title:     Manager of GP     

 

 

4

EX-31.1 5 ex31-1.htm EXHIBIT 31.1 psww20160331_10q.htm

Exhibit 31.1

Certification Pursuant to Rule 13a-14(a)/15d-14(a)

(Chief Executive Officer)

 

Certification by the Chief Executive Officer and Principal Financial Officer

 

I, Michael Gorton, certify that:

 

 

1.

I have reviewed this quarterly report on Form 10-Q of Principal Solar, Inc.;

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision; to ensure that material information relating to the registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Date: May 19, 2016

 

 

 

 

 

/s/ Michael Gorton

 

 

Michael Gorton

 

 

Chief Executive Officer

and Principal Financial Officer

 

EX-32.1 6 ex32-1.htm EXHIBIT 32.1 psww20160331_10q.htm

Exhibit 32.1

Section 1350 Certification

(Chief Executive Officer)

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Principal Solar, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Gorton, Chief Executive Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

 

1.

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

 

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.

 

 

 

Date: May 19, 2016

 

 

 

 

 

/s/ Michael Gorton

 

 

Michael Gorton

 

 

Chief Executive Officer
and Principal Financial Officer

 

 

EX-101.INS 7 psww-20160331.xml EXHIBIT 101.INS false --12-31 Q1 2016 2016-03-31 10-Q 0001587476 5564258 Yes Smaller Reporting Company Principal Solar, Inc. No No psww P10Y P5Y180D P4Y109D P10Y 604200 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE </div><div style="display: inline; font-weight: bold;">7</div><div style="display: inline; font-weight: bold;"> - </div><div style="display: inline; font-weight: bold;">COMMISSIONS PAYABLE</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Carlyle Capital Markets, Inc.</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In December 2013, the Company engaged Carlyle Capital Markets, Inc. and its affiliate, Friedman, Luzzatto &amp; Co. (together &quot;CCMI&quot;), to assist it in identifying sources of and securing financing for its solar projects to be built. CCMI is a firm of three professionals having its sole office in Dallas, Texas and, though having a similar name, is not affiliated with the well-known and respected firm, The Carlyle Group, headquartered in Washington, D.C.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In more than 20 months, CCMI was unable to arrange financing of any type or amount and was unable to even generate enough interest to produce a financing proposal from a prospective investor or lender. With CCMI failing its promise, the Company raised money on its own to maintain operations and further its solar development efforts. Despite CCMI's failure to secure even a single financing proposal (let alone a proposal acceptable to the Company), and despite CCMI having no involvement in non-project related financing efforts undertaken by the Company, CCMI claimed an entitlement to extensive fees.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Initially set for arbitration in February 2016, the parties mediated the matter instead in November 2015 and settled with the Company paying CCMI $1.7 million in connection with the August 2015 assignment of Principal Sunrise IV. Funds to pay the settlement came from the $2.5 million escrow deposit established concurrent with the assignment of the project. Additionally, the Company agreed to pay CCMI 10% of any proceeds from financing or disposition of Principal Sunrise V (aka IS 42), should such event take place on or before July 30, 2016. The Company had accrued a Commission payable of $600 thousand at December 31, 2015, based upon its expected proceeds from the disposition of Principal Sunrise V, and funds to pay this later amount are expected to come from the financing or disposition of Principal Sunrise V.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Vis Solis, Inc.</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In November 2014, the Company entered into a services agreement (the &#x201c;Services Agreement&#x201d;) with Vis Solis, Inc. (&quot;VIS&quot;), the minority interest holder of our former Powerhouse One subsidiary, wherein VIS would refer to the Company &quot;economically viable solar generation projects&quot; for acquisition; identify and source engineering procurement and construction firms; identify and source operations and maintenance contractors; among other things necessary to build, own, and operate solar projects. In exchange for its services, VIS would be compensated from the construction and permanent financing arranged by the Company based upon the installed kilowatts of each project the Company accepted, took under contract, and put into commercial operation. Any compensation owing to VIS from the Company under the Services Agreement would be due either at the project&#x2019;s &quot;Financial Close&quot; or its COD.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In August 2015, the Company assigned its contractual rights to develop, finance, and put into commercial operation its project Principal Sunrise IV to Carolina Energy Partners II, LLC (&#x201c;CEP&#x201d;) as the Company had been unable to arrange either construction or permanent financing for this project. </div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In January 2016, the Company and VIS mediated the matter and reached a settlement wherein the Company will pay VIS $900 thousand to settle all matters between the parties and terminate the original agreement. As a part of its gain on sale and assignment of assets, the Company had accrued a commission payable of $900 thousand at December 31, 2015, and funds to pay such amount are expected to come from the earlier of COD of Principal Sunrise IV (upon which the Company expects to receive $1.6 million) or the disposition of Principal Sunrise V, if any.</div></div></div> 600000 900000 1540000 1540000 966090 600000 1250000 250000 4000000 0 4000000 108000000 500000 500000 216000 6.77 0.1 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 5 - DISPOSAL OF ASSETS</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Disposition of Principal Sunrise V (aka IS 42) </div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company is negotiating to assign its interest in Principal Sunrise V to a buyer contingent upon the assignee's ability to secure the necessary tax equity and debt financing (approximately $108 million combined) to build and operate the project. Tax equity is defined as temporary equity invested whose primary source of return is monetizing the tax attributes of the underlying investment (&quot;tax equity&quot;). The parties have selected a date of June 30, 2016, to secure the financing and close the transaction, and such date may be extended by the parties. If completed, under the assignment agreement the Company would be repaid its cumulative investment through the closing date ($5.1 million at March 31, 2016) and a separate development fee up to $4.0 million. As a part of the assignment, the Company guaranteed the assignee a 10% after-tax rate of return, with any deficit being deducted from the development fee to be received by the Company. Due to its variable nature, the ultimate development fee received by the Company is expected to range between $0 and $4 million to be paid incrementally between closing and COD as the costs to construct the project become more certain. As a part of the transaction, the assignee has agreed to fund a portion of the development costs between signing and closing through a loan to the Company of up to $333 thousand, and the project seller has agreed to be paid their balance due at closing, both lessening the monthly cash burden to the Company. </div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">There can be no assurance the assignment of Principal Sunrise V will be closed or closed upon the terms described above, and failure to close or to close timely would result in a loss of the Company's investment to date. </div></div></div> 0.08 0.12 110 Sep 2009 Alfred, ME 0 25 yr. + 2 - 25-yr renewals 333000 500000 500000 0 0 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE </div><div style="display: inline; font-weight: bold;">8</div><div style="display: inline; font-weight: bold;"> - </div><div style="display: inline; font-weight: bold;">MEDIATION SETTLEMENT</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">TCH Principal Solar, LP</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In March 2015, TCH Principal Solar, LP (&quot;TCH&quot;) made two equity investments in our Common Stock (March 5th and 25th) of $500 thousand each. In September 2015, it notified the Company it had realized the Company had completed an issuance of debt securities to Alpha, including warrants, immediately before its first equity investment in March and that TCH wanted an &quot;equal deal&quot; despite the disparity of security instruments and other terms. The Company responded to the notice with a list of questions and such questions went unanswered by TCH.</div></div> <div style=" MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In January 2016, TCH demanded mediation to resolve the matter and the mediation occurred on March 3, 2016. The parties have agreed the Company would pay TCH an amount of $300 thousand and 10% of the proceeds from the disposition of Principal Sunrise V, if and when such occurs, with the total payment not to exceed $800 thousand. The Company had accrued an $800 thousand Mediation settlement at December 31, 2015, and funds to pay such amount are expected to come from proceeds from the disposition of Principal Sunrise V.</div></div></div> 0.15 12396 16268 0.1 0.1 1600000 P2Y P3Y 534654 50000 1050748 513363 1949 204816 97754 12364250 12355916 8334 8334 8334 0 37500 0 206480 794816 550434 765590 276513 467500 14708686 11734719 1917025 2167395 12791661 9567324 263871 498330 104328 565675 -234459 461347 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Cash and Equivalents</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">We consider cash, deposits, and short-term investments with original maturities of three months or less&nbsp;as cash and equivalents.&nbsp; Our deposits are maintained primarily in two financial institutions and, at times, may exceed amounts covered by U.S. Federal Deposit Insurance Corporation insurance.</div></div></div></div></div></div></div></div></div></div></div></div> 4 6 4 5.86 4 37763 234375 545455 550434 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 15 - COMMITMENTS AND CONTINGENCIES</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Contingent </div><div style="display: inline; font-weight: bold;">Obligation</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In connection with the assignment of Principal Sunrise IV (see NOTE 5 &quot;DISPOSAL OF ASSETS&quot;), the Company became contingently liable to the solar project's original developer in the amount of $600,000, if and only if the assignee of the Company's rights to that project fails to pay the original developer a like amount at the commercial operation date. No liability has been recorded in the financial statements as the failure of the assignee to pay the amount when due is not probable.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Stueben Investment</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Effective June 14, 2013, the Company entered into a Subscription Agreement with Steuben Investment Company II, L.P. (&#x201c;Steuben&#x201d;).&nbsp;&nbsp;Pursuant to the subscription agreement, Steuben purchased 727,273 shares of the Company&#x2019;s Common Stock for an aggregate of $1,600,000 or $2.20 per share. As additional consideration in connection with the subscription, the Company granted Steuben warrants to purchase 545,455 shares of the Company&#x2019;s Common Stock with an exercise price of $4.00 per share and a term of 10 years.&nbsp;&nbsp;The Company also provided Steuben registration rights whereby the Company was required to file a registration statement and take all necessary actions to maintain the availability of Rule 144 for a period of two years following its effective date. The registration statement became effective on February 3, 2015.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In the event we fail to take all necessary actions to enable Steuben to sell shares pursuant to Rule 144, we may have to pay to Steuben penalties totaling $216,000 which could have a material adverse effect on our available cash, limit our ability to raise capital, and negatively impact our results of operations. The Company has not accrued a liability for this potential penalty, as it believes the payment of any such penalty is not probable.</div></div></div> 966090 0.01 0.01 15000000 15000000 5564258 5564258 5564258 5564258 55642 55642 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 4 - COMPENSATION PAYABLE</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Certain members of the management team have deferred payment of their compensation for the benefit of the Company.&nbsp;&nbsp;No interest is accrued on such deferral and no formal terms of payment have been established.</div><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div></div> 0.96 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Principles of Consolidation</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company consolidates the financial position, results of operations, and cash flows of all majority-owned subsidiaries. The consolidated financial statements include the accounts of the Company (including the dba Principal Solar Institute) and its subsidiaries SunGen Mill 77, LLC; SunGen Step Guys, LLC; and Powerhouse One, LLC (through the date of sale, July 1, 2015). All intercompany accounts and transactions have been eliminated in consolidation.</div></div></div></div></div></div></div></div></div></div></div></div> 473407 349950 1600000 7900000 269688 8149191 5871119 5024 127722 75495 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 6 - NOTES PAYABLE</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Acquisition Note Payable</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On June 17, 2013, Powerhouse One, LLC secured financing of $5,050,000 from Bridge Bank, National Association (&quot;Bridge Bank&quot;) to acquire the membership interest (and the underlying solar arrays) of co-sellers, Vis Solis, Inc., a Tennessee limited liability company, and AstroSol, Inc., a Tennessee corporation. The note bore a fixed interest rate of 7.5% annually. In August 2015, as a part of the disposal of Powerhouse One, all principal and interest pursuant to the Acquisition Note Payable was paid in full.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In conjunction with the acquisition note payable, warrants to purchase 37,763 shares of Common Stock were issued to Bridge Bank with an exercise price of $4.00 and a contractual life of 10 years. The value of the warrants issued in connection with this debt, as determined using the Black-Scholes model, was $81,449 and was recorded as a discount to the debt. Amortization expense was $0 and $5,091 for the three months in 2015 and 2014, respectively.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Bridge Bank warrants have cashless exercise rights, redemption rights providing the Company the right to redeem the warrants for $604,200, anti-dilution rights associated with subsequent offerings of equity securities, a term expiring on the first to occur of (i) the 10 year anniversary of the grant, (ii) the closing of the Company&#x2019;s initial public offering, or (iii) the liquidation of the Company (each a &#x201c;Termination Event&#x201d;). In each case, unless exercised earlier, the warrants are automatically exercised on a cashless basis upon a Termination Event.&nbsp;&nbsp;The Company also provided the holder registration rights in connection with the grant of the warrants.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Convertible Debenture (Alpha)</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On March 2, 2015, the Company entered into a convertible debenture with Alpha to borrow $1,250,000. In August 2015, all principal and interest pursuant to the convertible debenture was paid in full. Amortization of the discount and interest expense recognized during the three months in 2015 totaled $209,722.</div></div> <div style=" MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Notes Payable, Related Parties</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In June 2014, the Company issued convertible notes of $250,000 each to two of its Board members, Messrs. Heller and Marmol, to fund deposits on potential future acquisitions. In August 2015, all principal and interest pursuant to the convertible notes were paid in full.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In December 2014, Michael Gorton, the Company's Chief Executive Officer, loaned to the Company pursuant to a convertible note $130,000. In August 2015, all principal and interest pursuant to the convertible note was paid in full.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In March 2016, a trust maintained by a contractor to the Company made a short-term unsecured loan to the Company in the amount of $300,000 under a short-term promissory note. The note bore a flat fee of $45,000 that was recorded as interest expense, and matures on June 24, 2016. Amounts outstanding beyond the maturity date bear interest at a rate of 12% per annum. Proceeds from the loan were used primarily for development costs of Principal Sunrise V.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Interest expense for the notes payable, related parties, recognized during the three months in 2016 and 2015 totaled $45,000 and $18,641, respectively.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Convertible Note</div><div style="display: inline; font-weight: bold;"> Payable</div><div style="display: inline; font-weight: bold;">, Non-Related Party</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In January 2015, the Company issued a convertible note to an unrelated party in the amount of $50,000. In August 2015, all principal and interest pursuant to the convertible note was paid in full. Interest expense for the notes payable, non-related party, recognized during the three months in 2015 totaled $1,266.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Arowana</div><div style="display: inline; font-weight: bold;"> Notes</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;"></div><div style="display: inline; font-style: italic;">Additional Projects</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On August 20, 2015, the Company issued a promissory note and security agreement to Arowana International Limited (&quot;Arowana&quot;) in the original principal amount of $1,600,000. The note matures on December 31, 2016, and bears simple interest at the rate of 6% per annum (the &quot;Arowana Note&quot;). The note is convertible, at the option of the holder, into membership interests in our Principal Sunrise V project based upon a valuation not yet determinable.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company used the proceeds from the Arowana Note to make investments in two additional projects totaling 68MW AC (&quot;Additional Projects&quot;). The first of the two projects, 34.2MW AC in North Carolina, should begin construction in the second quarter of 2016 and is expected to be completed in the fourth quarter of 2016. The second of the two projects, 33.8 MW AC also in North Carolina, is approximately 6 weeks behind the first. The Additional Projects serve as collateral for the Company&#x2019;s obligations under the Arowana Note, which is otherwise unsecured and non-recourse to the Company.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Arowana continues to fund the development costs of the Additional Projects and, at March 31, 2016, the cumulative investment in the Additional Projects totaled $7.8 million, and the balance of the Arowana Note was $7.9 million, including interest. There can be no assurance Arowana will continue funding the two projects and failing to do so could, depending upon the finality, timing, and proceeds from the assignment of Principal Sunrise V, could cause the related power purchase agreements to be in default, resulting in a loss of all amounts invested to date.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;"></div><div style="display: inline; font-style: italic;">Principal Sunrise V</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Effective November 25, 2015, the Company issued a promissory note to Arowana in the principal amount of $269,688. The note matures on December 31, 2016, and bears simple interest at the rate of 12% per annum (the &quot;Second Arowana Note&quot;). </div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company used the proceeds from the Second Arowana Note to make an interconnection payment for Principal Sunrise V, and the note is secured by proceeds from the expected disposition of the project.</div></div></div> 5050000 1250000 50000 7800000 0.1 0.075 0.12 0.06 0.12 81449 0 5091 209722 75494 19215 19215 317669 336884 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 10 - DERIVATIVE LIABILITY ON WARRANTS</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On March 2, 2015, the Company issued warrants to purchase 234,375 shares of Common Stock with a 66-month contractual term to Alpha in connection with the issuance of convertible debentures (See NOTE 6 &quot;Convertible Debenture (Alpha)&quot;). The warrants were immediately exercisable into the Company&#x2019;s Common Stock with an exercise price of $6.00 per share.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">However, as the warrants had &#x201c;down round&#x201d; protection, they were treated as a derivative liability and were valued each period using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink<div style="display: inline; bottom:.33em; font-size: 82%; position: relative; vertical-align: baseline; vertical-align: baseline; position: relative; bottom:.33em;">&reg; </div>and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time all impacted the value of these warrants. On May 6, 2015, the Company issued Series A Preferred stock (NOTE 11 &#x201c;Preferred Stock&#x201d;) resetting the exercise price of the warrants to $4.00 per share, and the valuation was updated and reflected in the balance sheet.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Input assumptions on the issuance date were as follows:</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 80%; MARGIN-LEFT: 72pt; MARGIN-RIGHT: 20%; TEXT-INDENT: 0px; width: 700px;" border="0" cellpadding="0" cellspacing="0"> <tr style="BACKGROUND-COLOR: #cceeff"> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 81%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Estimated fair value </div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff">$</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 16%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff">6.77</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" nowrap="nowrap">&nbsp;</td> </tr> <tr style="BACKGROUND-COLOR: #ffffff"> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Expected life (years)</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 16%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff">5.51</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" nowrap="nowrap">&nbsp;</td> </tr> <tr style="BACKGROUND-COLOR: #cceeff"> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Risk free interest rate</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 16%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff">1.65</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" nowrap="nowrap">%</td> </tr> <tr style="BACKGROUND-COLOR: #ffffff"> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Volatility</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 16%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff">146.11</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" nowrap="nowrap">%</td> </tr> </table> </div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In this issuance of convertible debentures and warrants, completed as a result of arm's length negotiations between unrelated parties, the value of the warrants alone exceeded the proceeds received. The Company's need for ongoing financing made the transaction attractive, despite the economics of the transaction. The application<div style="display: inline; font-weight: bold;"> </div>of<div style="display: inline; font-weight: bold;"> </div>GAAP, resulted in a loss on the date of issuance of $336,884, offset by a subsequent gain of $317,669 stemming from the subsequent movement in the price of our Common Stock, together resulting in a net gain on derivative liability warrants of $19,215 for the period ended March 31, 2015.</div></div></div> 5024 52227 -0.07 -0.23 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Net Loss per Share</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Basic net income or loss per share is computed by dividing the net income or loss for the period by the weighted average number of shares of Common Stock outstanding for the period. Diluted income per share reflects the potential dilution of derivative securities by including other potential issuances of Common Stock including shares to be issued upon exercise of options and warrants and upon conversion of convertible debt. Potentially dilutive shares are not included in the event of a loss as the effect of doing so would be anti-dilutive. As of March 31, 2016, options to purchase 794,816 shares, and warrants to purchase 550,434 shares of our Common Stock have been excluded from the calculation of diluted loss per share, as their effect would have been anti-dilutive. As of March 31, 2015, options to purchase 765,590 shares and warrants to purchase 276,513 shares of our Common Stock, and 467,500 shares issuable upon the conversion of convertible notes payable have been excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive.</div></div></div></div></div></div></div></div></div></div></div></div> 5010 184075 424248 390702 5100000 2500000 P5Y186D 1.4611 0.0165 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 80%; MARGIN-LEFT: 72pt; MARGIN-RIGHT: 20%; TEXT-INDENT: 0px;; width: 700px;" border="0" cellpadding="0" cellspacing="0"> <tr style="BACKGROUND-COLOR: #cceeff"> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 81%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Estimated fair value </div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff">$</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 16%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff">6.77</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" nowrap="nowrap">&nbsp;</td> </tr> <tr style="BACKGROUND-COLOR: #ffffff"> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Expected life (years)</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 16%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff">5.51</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" nowrap="nowrap">&nbsp;</td> </tr> <tr style="BACKGROUND-COLOR: #cceeff"> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Risk free interest rate</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 16%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff">1.65</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" nowrap="nowrap">%</td> </tr> <tr style="BACKGROUND-COLOR: #ffffff"> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Volatility</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 16%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff">146.11</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" nowrap="nowrap">%</td> </tr> </table></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Fair Value</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.&nbsp;&nbsp;We believe the carrying values of our current assets and current liabilities approximate their fair values, and the carrying value of our notes payable approximate their estimated fair value for debts with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings.</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">All related party transactions are evaluated by our officers and/or Board of Directors who take into account various factors, including their fiduciary duty to the Company; the relationships of the related parties to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; and the terms the Company could receive from an unrelated third party. Despite this review, related party transactions may not be recorded at fair value.</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">We do not engage in hedging activities, but did have a derivative instrument treated as a liability whose value was measured on a recurring basis (see &quot;Fair Value Instruments&quot; and &quot;Derivative Liability on Warrants&quot; included herein).</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">&nbsp;</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">Fair Value Instruments</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On March 2, 2015, the Company entered into a convertible debenture with Alpha Capital Anstalt (&quot;Alpha&quot;) (See NOTE 6 &quot;Convertible Debenture (Alpha)&quot;). In connection with the loan, the Company granted Alpha complex warrants with certain &quot;down round&quot; protection. As such, they were treated as a derivative liability and were valued using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink&reg; and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time all impacted the value of these warrants. The Company re-valued these warrants at the end of each reporting period and any changes are reflected as gains or losses in current period results. (See NOTE 10 - DERIVATIVE LIABILITY ON WARRANTS). In August 2015, all principal and interest pursuant to the convertible debenture was paid in full thus eliminating the terms giving rise to a potential down round price adjustment of the warrants. As such, a final re-valuation as of the repayment date was recorded and the warrants are now considered equity instruments.</div></div></div></div></div></div></div></div></div></div></div></div> -19215 277557 919671 -14 56353 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Long-Lived Assets</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The recoverability of the carrying value of long-lived assets is assessed when an indicator of impairment has been identified.</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">For purposes of recognition and measurement of an impairment loss, a long-lived asset or group of assets is combined with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">For long-lived assets, when impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group&#x2019;s carrying value to determine if the asset group is recoverable. If undiscounted cash flows are less than carrying value, the excess of carrying value over fair value is expensed in the period in which it is estimated to have occurred.</div></div></div></div></div></div></div></div></div></div></div></div> -408748 -1216007 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt 7.2pt 0pt 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 14 - TAXES</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt 7.2pt 0pt 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt 7.2pt 0pt 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Our estimated $13.3 million federal income tax net operating loss carryover expires over the period from 2030 through 2035. Our federal and state income tax returns are not under examination by any taxing authorities and no statute extensions have been granted; therefore, only our December 31, 2012 to 2015 tax returns are subject to examination. </div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt 7.2pt 0pt 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt 7.2pt 0pt 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Management has evaluated all tax positions and determined that no uncertain tax positions exist at this time. As a result, no amounts have been recorded related to a tax position more likely than not to be sustained. The Company classifies interest and penalties related to income taxes, if any, as interest expense and general and administrative costs, respectively, in our consolidated financial statements. </div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company has established a valuation allowance to fully reserve the net deferred tax assets for all periods due to the uncertainty of the timing and amounts of future taxable income. </div></div></div> 1233 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Income Taxes</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Income taxes are recorded under the asset and liability method under which deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in our consolidated financial statements. Income tax returns are subject to a three-year statute of limitations during which they are subject to audit and adjustment. We file income tax returns in the United States federal jurisdiction and certain states.</div></div></div></div></div></div></div></div></div></div></div></div> 0 0 537384 50551 -1949 17645 107062 39567 33546 116500 130712 32842 -13962 -12875 131177 333474 1266 45000 18641 465 94152 45000 191604 60892 0 6645 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 9 - LEASES</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company's solar array sits on a rooftop subject to a service agreement with initial terms equal to the energy sales agreement and having one or more renewal options. There are no separate rental payments in the case of rooftop installations. The Company's current solar array installations is as follows:</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 90%; MARGIN-LEFT: 19pt; TEXT-INDENT: 0px; width: 700px;" border="0" cellpadding="0" cellspacing="0"> <tr> <td style="WIDTH: 24%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Installation</div></div></td> <td style="WIDTH: 16%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Location</div></div></td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">kW</div></div></td> <td style="WIDTH: 15%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Date</div></div></td> <td style="WIDTH: 26%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Term</div></div></td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Rent</div></div></td> </tr> <tr style="BACKGROUND-COLOR: #cceeff"> <td style="WIDTH: 24%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">SunGen StepGuys</div></div></td> <td style="WIDTH: 16%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Alfred, ME</div></div></td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">110</div></div></td> <td style="WIDTH: 15%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Sep 2009</div></div></td> <td style="WIDTH: 26%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">25 yr. +</div><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></div></div></td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">None</div></div></td> </tr> <tr style="BACKGROUND-COLOR: #ffffff"> <td style="WIDTH: 24%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="WIDTH: 16%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="WIDTH: 15%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="WIDTH: 26%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">2 - 25-yr renewals</td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> </tr> </table> </div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Rent expense for Powerhouse One was $6,645 during the three months in 2015.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In each case, the Company is obligated to remove such installations at the end of the lease terms. As the expected termination dates are decades off, there is little experience de-installing solar arrays anywhere in the world, and costs are expected to be minimal, such removal costs have not been separately accounted for.</div></div></div> 13685545 10311164 14708686 11734719 13685545 10311164 1003839 1003839 800000 991371 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 12 - NONCONTROLLING INTEREST</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Prior to its sale effective July 1, 2015, the original owners of Powerhouse One continued to own approximately 11% of the membership interest of the limited liability company. The noncontrolling interests of equity investors in Powerhouse One was reported on the consolidated balance sheet and statement of operations as &quot;Noncontrolling interest in subsidiary&quot; (&quot;noncontrolling interest&quot;) and reflected their respective interests in the equity and the income or loss of the limited liability company.</div></div></div> 0.11 2565676 2928729 -3224336 -2202092 424201 -265290 6483 -408748 -1223723 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Recent Accounting Pronouncements</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In February 2016, the Financial Accounting Standards Board (&quot;FASB&quot;) issued Accounting Standards Update (&quot;ASU&quot;) No. 2016-02, &quot;Leases (Topic 842)&quot;. ASU 2016-02 requires all leases in excess of 12 months to be reported on the balance sheet as a liability based on the net present value of the expected lease payments, and a right-to-use asset for the term of the lease. On the statement of operations, capital leases will continue to be treated as financing transactions, meaning interest and amortization will be included as rent expense. Because interest is calculated on a declining balance over time, the cost of capital leases will look more expensive at the beginning of a lease. Leases that qualify as operating leases will be reported as rent expense. The standard is effective for annual periods beginning after December 15, 2018. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In March 2016, the FASB issued ASU No. 2016-09 <div style="display: inline; font-style: italic;">Compensation - Stock Compensation (Topic 718) Improvement to Employee Share-Based Payment Accounting</div>, which affects the accounting for the income tax consequences of share-based payments, the classifications of awards as either equities or liabilities, and the classification on the statement of cash flows. ASU No. 2016-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those annual periods. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.</div></div></div></div></div></div></div></div></div></div></div></div> 300000 300000 2012 2015 -277571 -863318 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 90%; MARGIN-LEFT: 19pt; TEXT-INDENT: 0px;; width: 700px;" border="0" cellpadding="0" cellspacing="0"> <tr> <td style="WIDTH: 24%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Installation</div></div></td> <td style="WIDTH: 16%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Location</div></div></td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">kW</div></div></td> <td style="WIDTH: 15%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Date</div></div></td> <td style="WIDTH: 26%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Term</div></div></td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BORDER-BOTTOM: #000000 1px solid"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Rent</div></div></td> </tr> <tr style="BACKGROUND-COLOR: #cceeff"> <td style="WIDTH: 24%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">SunGen StepGuys</div></div></td> <td style="WIDTH: 16%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Alfred, ME</div></div></td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">110</div></div></td> <td style="WIDTH: 15%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Sep 2009</div></div></td> <td style="WIDTH: 26%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">25 yr. +</div><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></div></div></td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff"> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">None</div></div></td> </tr> <tr style="BACKGROUND-COLOR: #ffffff"> <td style="WIDTH: 24%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="WIDTH: 16%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="WIDTH: 15%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> <td style="WIDTH: 26%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">2 - 25-yr renewals</td> <td style="WIDTH: 9%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff">&nbsp;</td> </tr> </table></div> 13300000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 1 - OVERVIEW</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Basis of Presentation</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The unaudited consolidated financial statements and related notes of have been prepared pursuant to Article 8-03 of the rules and regulations of the Securities and Exchange Commission (the &#x201c;SEC&#x201d;). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (&quot;GAAP&quot;) have been omitted. In the opinion of management, all adjustments and information (consisting only of normal recurring accruals) considered necessary for a fair presentation of the accompanying unaudited consolidated financial statements have been included.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The year-end balance sheet was derived from the Company&#x2019;s audited financial statements. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the Company&#x2019;s audited financial statements included in its 2015 Annual Report on Form 10-K. The results of operations for the periods reflected herein are not necessarily indicative of the results to be expected for the full year.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">Going Concern</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2016, the Company has an accumulated deficit of approximately $11.4 million, and the Company has cumulatively had negative cash flows from operations since inception. Further, the Company is not considering any new large utility-scale solar projects at this time. Its ability to continue as a going concern is dependent upon the ability of the Company to collect its amounts receivable and dispose of its remaining development assets under development in order to meet its obligations, pay its liabilities arising from normal business operations when they come due, and potentially develop and execute upon a new business strategy. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">Concentration</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Historically, approximately 96% of our consolidated power generation revenue arose from our Powerhouse One solar installation. The Powerhouse One subsidiary was sold in August 2015.</div> <div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">As of the date of this report, the Company does not have any expectation of replacing the revenue generated by its Powerhouse One subsidiary with any other solar project.</div></div></div> 800000 800000 131177 352689 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 3 - LIABILITIES ARISING FROM REVERSE MERGER</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Liabilities arising from the reverse merger represent&nbsp;long term real estate leases which had been abandoned, general unsecured liabilities, commercial liens, and tax liens filed with various states all associated with the Company&#x2019;s pre-reverse merger operations, which were unknowingly assumed in the March 2011 reverse merger transaction. The statute of limitations for most of such liabilities is five years and for most liens is ten years, subject to renewal at the lien holders&#x2019; option, depending upon the jurisdiction.&nbsp;&nbsp;Although the liens accrue interest at between 8% and 12% per year, the Company has ceased accruing interest as it believes the liability recorded to date is adequate to cover the ultimate claims that may, one day, be presented. Liabilities not associated with a lien have been accrued based upon management&#x2019;s estimation of the amount to be paid.&nbsp;&nbsp;Liabilities associated with a lien have been accrued at face value.&nbsp;&nbsp;Management believes all such liabilities have been indemnified by Pegasus Funds, LLC (and/or its affiliates or related parties, &quot;Pegasus&quot;) to which (including its assigns) the Company issued 534,654 shares of its Common Stock as part of the reverse merger transaction.&nbsp;&nbsp;However, as the Company is obligor, the Company has recorded the liability.&nbsp;&nbsp;To date, only one lien holder has approached the Company concerning payment.&nbsp;&nbsp;Such lien holder is pursuing the former management of the Company first through litigation.&nbsp;&nbsp;To the extent such lien holder recovers the liability from the former management, the lien against the Company will be reduced.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In March 2015, the Company entered into a settlement agreement with Pegasus regarding its indemnification of the Company in regards to the legacy liabilities. In the settlement agreement, the Company agreed to accept the return of 215,154 shares of the original 534,654 shares of its Common Stock issued to Pegasus and its principals and affiliates in acquiring the shell company, Kupper Parker Communications, Inc., which later became Principal Solar, Inc. As the shares of Common Stock were initially issued in a common stock for preferred stock share exchange with Pegasus, the shares returned by Pegasus will be cancelled without further accounting recognition. The cancellation of 50,000 of the shares was effected in December 2015, and the remaining will be recognized for accounting purposes once they are received from Pegasus.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In the settlement with Pegasus, the Company preserved its rights to pursue the individual(s) serving as officers of Kupper Parker Communications, Inc. who, prior to the exchange of shares, had agreed in the Exchange Agreement to &quot;satisfy and assume liability for the payment of any additional liabilities not identified&quot; in the agreement. In April 2015, the Company filed a lawsuit against the remaining individual serving as an officer of Kupper Parker Communications, Inc. prior to the exchange of shares seeking an amount of $991,371 plus accruing interest and legal fees. Any recovery from the lawsuit is uncertain at this time, and such recovery would in no way diminish our potential obligation to third parties.</div></div></div> 21099 33495 1624000 1624000 3224336 2202092 1700000 900000 300000 0.01 0.01 0.01 2000000 2000000 2000000 29154 43116 250000 130000 2278072 50000 2 1679001 1250000 300000 28451 200000 -408748 -408748 -408748 -1217240 12791661 9567324 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Construction in Progress</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company records as construction in progress those items of a capital and expense nature necessary to develop, construct, and place into service a solar project. Such costs consists primarily of the cost of the project company's acquisition rights, equipment costs, interconnection costs, and the costs of independent engineers, valuation firms, and rent, property taxes, financing costs, and insurance during the construction period.</div></div></div></div></div></div></div></div></div></div></div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Accounts Receivable</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of individual accounts. No allowance has been recorded in the accompanying financial statements.</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Other Receivable</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Other receivable reflects the remaining amount due from the August 2015 assignment of Principal Sunrise IV. Payable by the assignee at the project's commercial operation date (&quot;COD&quot;), the project is expected to reach COD in June 2016. No allowance has been recorded against the receivable.</div></div></div></div></div></div></div></div></div></div></div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 13 &#x2013; RELATED PARTY TRANSACTIONS</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Other than the Board member options described herein in a NOTE 11 &quot;Stock Options&#x201d;, and the issuance of convertible notes described herein in the NOTE 6 &quot;Notes Payable, Related Parties&quot;, no other related party transactions occurred during 2016 and 2015.</div></div></div> 62455 -11396751 -10988003 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Revenue Recognition</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Power generation revenue is recognized as delivered to the purchaser based upon electrical meters affixed to the solar array and measuring kilowatt-hours produced. Our current power generation operations do not generate renewable energy credits, performance-based incentives, or similar credits to the benefit of the Company.</div></div></div></div></div></div></div></div></div></div></div></div> 2.20 5010 184075 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 80%; MARGIN-LEFT: 10%; MARGIN-RIGHT: 10%; TEXT-INDENT: 0px;; width: 700px;" border="0" cellpadding="0" cellspacing="0"> <tr> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 85%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" colspan="2"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Estimated fair value</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="7">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="107">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 4%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: center; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="20">$6.00</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" colspan="2">&nbsp;</td> </tr> <tr> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 85%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" colspan="2"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Expected life (years)</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" width="7">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" width="107">2.5</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 4%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: center; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" width="20">to</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" colspan="2">5.0 </td> </tr> <tr> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 85%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" colspan="2"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Risk free interest rate</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" width="7">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="107">.052%</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 4%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: center; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="20">to</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" colspan="2">1.58%</td> </tr> <tr> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 85%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" colspan="2"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Volatility</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" width="7">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" width="107">146%</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 4%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: center; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" width="20">to</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" colspan="2">207%</td> </tr> </table></div> 8334 341071 75000 12500 1.46 2.07 0.00052 0.0158 794816 794816 6250 6000 6250 6 6 6 6 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Equity Transaction Fair Values</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The estimated fair value of our $.01 par value common stock (&quot;Common Stock&quot;) issued in share-based payments is measured by&nbsp;the more relevant of (1) the prices received in private placement sales of our stock or (2) the Company's publically-quoted market price. &nbsp;We estimate&nbsp;the&nbsp;fair value of simple warrants and stock options when issued or, in the case of issuances to non-employees, when vested, using the Black-Scholes option-pricing (&quot;Black-Scholes&quot;) model that requires the input of subjective assumptions.&nbsp; When valuing more complex warrants, options, or other derivative equity instruments, we use a binomial lattice-based option pricing model or Monte Carlo option pricing model, whichever management deems more appropriate under the circumstances. Recognition in stockholders&#x2019; equity and expense of the fair value of stock options awarded to employees is on the straight-line basis over the requisite service period.&nbsp; Subsequent changes in fair value are not recognized.</div></div></div></div></div></div></div></div></div></div></div></div> P10Y P5Y P10Y P2Y182D P5Y 5564258 5564258 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Recent Accounting Pronouncements</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In February 2016, the Financial Accounting Standards Board (&quot;FASB&quot;) issued Accounting Standards Update (&quot;ASU&quot;) No. 2016-02, &quot;Leases (Topic 842)&quot;. ASU 2016-02 requires all leases in excess of 12 months to be reported on the balance sheet as a liability based on the net present value of the expected lease payments, and a right-to-use asset for the term of the lease. On the statement of operations, capital leases will continue to be treated as financing transactions, meaning interest and amortization will be included as rent expense. Because interest is calculated on a declining balance over time, the cost of capital leases will look more expensive at the beginning of a lease. Leases that qualify as operating leases will be reported as rent expense. The standard is effective for annual periods beginning after December 15, 2018. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In March 2016, the FASB issued ASU No. 2016-09 <div style="display: inline; font-style: italic;">Compensation - Stock Compensation (Topic 718) Improvement to Employee Share-Based Payment Accounting</div>, which affects the accounting for the income tax consequences of share-based payments, the classifications of awards as either equities or liabilities, and the classification on the statement of cash flows. ASU No. 2016-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those annual periods. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.</div></div> <div style=" MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></div><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Principles of Consolidation</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company consolidates the financial position, results of operations, and cash flows of all majority-owned subsidiaries. The consolidated financial statements include the accounts of the Company (including the dba Principal Solar Institute) and its subsidiaries SunGen Mill 77, LLC; SunGen Step Guys, LLC; and Powerhouse One, LLC (through the date of sale, July 1, 2015). All intercompany accounts and transactions have been eliminated in consolidation.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Fair Value</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.&nbsp;&nbsp;We believe the carrying values of our current assets and current liabilities approximate their fair values, and the carrying value of our notes payable approximate their estimated fair value for debts with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">All related party transactions are evaluated by our officers and/or Board of Directors who take into account various factors, including their fiduciary duty to the Company; the relationships of the related parties to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; and the terms the Company could receive from an unrelated third party. Despite this review, related party transactions may not be recorded at fair value.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">We do not engage in hedging activities, but did have a derivative instrument treated as a liability whose value was measured on a recurring basis (see &quot;Fair Value Instruments&quot; and &quot;Derivative Liability on Warrants&quot; included herein).</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">Fair Value Instruments</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On March 2, 2015, the Company entered into a convertible debenture with Alpha Capital Anstalt (&quot;Alpha&quot;) (See NOTE 6 &quot;Convertible Debenture (Alpha)&quot;). In connection with the loan, the Company granted Alpha complex warrants with certain &quot;down round&quot; protection. As such, they were treated as a derivative liability and were valued using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink&reg; and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time all impacted the value of these warrants. The Company re-valued these warrants at the end of each reporting period and any changes are reflected as gains or losses in current period results. (See NOTE 10 - DERIVATIVE LIABILITY ON WARRANTS). In August 2015, all principal and interest pursuant to the convertible debenture was paid in full thus eliminating the terms giving rise to a potential down round price adjustment of the warrants. As such, a final re-valuation as of the repayment date was recorded and the warrants are now considered equity instruments.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Use of Estimates</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The preparation of our financial statements in accordance with GAAP requires us to,&nbsp;on an ongoing basis, make significant estimates and judgments that affect the reported values of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities.&nbsp;&nbsp;We base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances, the results of which form the basis for&nbsp;our conclusions.&nbsp;&nbsp;Actual results may differ from these estimates under different assumptions or conditions. &nbsp;Such differences could have a material impact on our future financial position, results of operations, and cash flows.</div></div> <div style=" MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></div><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Cash and Equivalents</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">We consider cash, deposits, and short-term investments with original maturities of three months or less&nbsp;as cash and equivalents.&nbsp; Our deposits are maintained primarily in two financial institutions and, at times, may exceed amounts covered by U.S. Federal Deposit Insurance Corporation insurance.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Accounts Receivable</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of individual accounts. No allowance has been recorded in the accompanying financial statements.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Other Receivable</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Other receivable reflects the remaining amount due from the August 2015 assignment of Principal Sunrise IV. Payable by the assignee at the project's commercial operation date (&quot;COD&quot;), the project is expected to reach COD in June 2016. No allowance has been recorded against the receivable.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Construction in Progress</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company records as construction in progress those items of a capital and expense nature necessary to develop, construct, and place into service a solar project. Such costs consists primarily of the cost of the project company's acquisition rights, equipment costs, interconnection costs, and the costs of independent engineers, valuation firms, and rent, property taxes, financing costs, and insurance during the construction period.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Long-Lived Assets</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The recoverability of the carrying value of long-lived assets is assessed when an indicator of impairment has been identified.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">For purposes of recognition and measurement of an impairment loss, a long-lived asset or group of assets is combined with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">For long-lived assets, when impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group&#x2019;s carrying value to determine if the asset group is recoverable. If undiscounted cash flows are less than carrying value, the excess of carrying value over fair value is expensed in the period in which it is estimated to have occurred.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Revenue Recognition</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Power generation revenue is recognized as delivered to the purchaser based upon electrical meters affixed to the solar array and measuring kilowatt-hours produced. Our current power generation operations do not generate renewable energy credits, performance-based incentives, or similar credits to the benefit of the Company.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Income Taxes</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Income taxes are recorded under the asset and liability method under which deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in our consolidated financial statements. Income tax returns are subject to a three-year statute of limitations during which they are subject to audit and adjustment. We file income tax returns in the United States federal jurisdiction and certain states.</div></div> <div style=" MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</div><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Equity Transaction Fair Values</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The estimated fair value of our $.01 par value common stock (&quot;Common Stock&quot;) issued in share-based payments is measured by&nbsp;the more relevant of (1) the prices received in private placement sales of our stock or (2) the Company's publically-quoted market price. &nbsp;We estimate&nbsp;the&nbsp;fair value of simple warrants and stock options when issued or, in the case of issuances to non-employees, when vested, using the Black-Scholes option-pricing (&quot;Black-Scholes&quot;) model that requires the input of subjective assumptions.&nbsp; When valuing more complex warrants, options, or other derivative equity instruments, we use a binomial lattice-based option pricing model or Monte Carlo option pricing model, whichever management deems more appropriate under the circumstances. Recognition in stockholders&#x2019; equity and expense of the fair value of stock options awarded to employees is on the straight-line basis over the requisite service period.&nbsp; Subsequent changes in fair value are not recognized.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Net Loss per Share</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Basic net income or loss per share is computed by dividing the net income or loss for the period by the weighted average number of shares of Common Stock outstanding for the period. Diluted income per share reflects the potential dilution of derivative securities by including other potential issuances of Common Stock including shares to be issued upon exercise of options and warrants and upon conversion of convertible debt. Potentially dilutive shares are not included in the event of a loss as the effect of doing so would be anti-dilutive. As of March 31, 2016, options to purchase 794,816 shares, and warrants to purchase 550,434 shares of our Common Stock have been excluded from the calculation of diluted loss per share, as their effect would have been anti-dilutive. As of March 31, 2015, options to purchase 765,590 shares and warrants to purchase 276,513 shares of our Common Stock, and 467,500 shares issuable upon the conversion of convertible notes payable have been excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive.</div></div></div> 727273 1600000 37500 1023141 1423555 55642 12355916 -10988003 1423555 55642 12364250 -11396751 1023141 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 11 &#x2013; CAPITAL STOCK</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Preferred Stock</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">At December 31, 2015, the Company had authorized 2,000,000 shares of $.01 par value Class A preferred stock.</div></div> <div style=" MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</div><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">&nbsp;</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Common Stock</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">At December 31, 2015, the Company had authorized 15,000,000 shares of $.01 par value Common Stock, and it trades on the OTC Pink<div style="display: inline; bottom:.33em; font-size: 82%; position: relative; vertical-align: baseline; vertical-align: baseline; position: relative; bottom:.33em;">&reg;</div> under the symbol &#x201c;PSWW.&#x201d;&nbsp;&nbsp;Holders of our Common Stock are entitled to one vote per share and receive dividends or other distributions when, and if, declared by our Board of Directors.&nbsp;&nbsp;In addition to shares outstanding, we have reserved 966,090 shares for issuance upon exercise of equity incentive awards with options to purchase 794,816 shares of Common Stock outstanding at March 31, 2016.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">Restricted Stock</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In January 2015, the Company awarded to an engineering firm, in exchange for its services on Principal Sunrise IV, 12,500 restricted shares pursuant to the 2014 Equity Incentive Plan. The value of the shares on the date of grant totaled $37,500 and the amount was capitalized as construction in progress.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Stock Options</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company maintains the <div style="display: inline; font-style: italic;">2014 Equity Incentive Plan </div>(the &quot;Plan&quot;), pursuant to which 794,816 of the total 966,090 shares of Common Stock reserved have been issued to date. The exercise of options, if any, will result in the issuance of new share by the Company.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;"></div><div style="display: inline; font-style: italic;">20</div><div style="display: inline; font-style: italic;">16</div><div style="display: inline; font-style: italic;"> Issuances</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">There have been no issuances in 2016.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;"></div><div style="display: inline; font-style: italic;">20</div><div style="display: inline; font-style: italic;">15</div><div style="display: inline; font-style: italic;"> Issuances</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In February 2015, the Company granted options to purchase 6,250 shares of Common Stock having an exercise price of $6.00 per share, a 10-year term, and immediate vesting to each of five directors as a discretionary bonus. The Company also granted in February 2015, options to acquire 6,000 shares of Common Stock to each of two advisors. The options have an exercise price of $6.00 per share, immediate vesting, and expiration dates extending to 5-years based upon their continued service of two years from the grant date. Finally, the Company granted to a consultant in February 2015, options to acquire 6,250 shares of Common Stock. The options have an exercise price of $6.00 per share, immediate vesting, and expiration dates extending to 10-years based upon continued service of three years from the date of grant.</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In each case above, the options were valued using the Black-Scholes model, and the resulting equity-based compensation expense included in general and administrative expense was $0 and $37,500 for the periods ended March 31, 2016 and March 31, 2015, respectively. </div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">As the Company does not have a significant history of post vesting exercises to estimate an expected life of the option, the simplified method was used wherein the expected life becomes the mid-point of the options vesting date and their contractual life. The valuation of all of the option issuances in 2015 were based upon the following parameters:</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 80%; MARGIN-LEFT: 10%; MARGIN-RIGHT: 10%; TEXT-INDENT: 0px; width: 700px;" border="0" cellpadding="0" cellspacing="0"> <tr> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 85%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" colspan="2"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Estimated fair value</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="7">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="107">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 4%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: center; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="20">$6.00</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" colspan="2">&nbsp;</td> </tr> <tr> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 85%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" colspan="2"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Expected life (years)</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" width="7">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" width="107">2.5</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 4%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: center; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" width="20">to</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" colspan="2">5.0 </td> </tr> <tr> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 85%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #cceeff" colspan="2"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Risk free interest rate</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #cceeff" width="7">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="107">.052%</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 4%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: center; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" width="20">to</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #cceeff" colspan="2">1.58%</td> </tr> <tr> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 85%; VERTICAL-ALIGN: top; BACKGROUND-COLOR: #ffffff" colspan="2"> <div style=" MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Volatility</div></div></td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 1%; VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: #ffffff" width="7">&nbsp;</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" width="107">146%</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 4%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: center; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" width="20">to</td> <td style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 5%; VERTICAL-ALIGN: bottom; TEXT-ALIGN: right; MARGIN-LEFT: 0pt; BACKGROUND-COLOR: #ffffff" colspan="2">207%</td> </tr> </table> </div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">As the Company does not have a significant history of post vesting exercises to estimate an expected life of the option, the simplified method was used wherein the expected life becomes the mid-point of the options vesting date and their contractual life.</div></div> <div style=" MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Warrants</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Company had 550,434 warrants outstanding at March 31, 2016, with a weighted average term of 4.3 years and a weighted average exercise price of $5.86 per share.</div></div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">NOTE 16 - SUBSEQUENT EVENTS</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Note Payable, Related Party</div></div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt 3pt 0pt 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In April 2016, a trust maintained by the Company's Director, Guillermo Marmol, made a short-term unsecured loan to the Company in the amount of $200,000. The promissory note bore a fee of 15% of the face amount, matures at the earlier of i) the financial closing of the disposition of Principal Sunrise V, ii) the receipt of remaining amounts due from the August 2015 assignment of Principal Sunrise IV, or iii) July 29, 2016. Amounts outstanding beyond the maturity date bear interest at a rate of 10% compounded daily. Proceeds were used primarily to pay development costs of the Principal Sunrise V project. </div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</div></div> <div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The note is i) subordinated to payment of amounts due under that certain settlement reached with Vis Solis (See NOTE 7 Commissions Payable - Vis Solis); ii) pari pasu to repayment of amounts outstanding under that certain promissory note with a trust maintained by a contractor to the Company; and iii) senior to all other unsecured debts of the Company.</div></div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-weight: bold;">Use of Estimates</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><div style="display: inline; font-style: italic;">&nbsp;</div></div></div><div style=" TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><div style="display: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The preparation of our financial statements in accordance with GAAP requires us to,&nbsp;on an ongoing basis, make significant estimates and judgments that affect the reported values of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities.&nbsp;&nbsp;We base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances, the results of which form the basis for&nbsp;our conclusions.&nbsp;&nbsp;Actual results may differ from these estimates under different assumptions or conditions. &nbsp;Such differences could have a material impact on our future financial position, results of operations, and cash flows.</div></div></div></div></div></div></div></div></div></div></div></div> 5564258 5435120 215154 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Restricted Stock [Member] Cost of revenues Antidilutive Securities, Name [Domain] us-gaap_ShareBasedCompensation Stock-based compensation Employee Stock Option [Member] Convertible Debt Securities [Member] Antidilutive Securities [Axis] Arowana Note [Member] Arowana note, that previously was a convertible note. us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriod Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period us-gaap_LossContingencyDamagesSoughtValue Loss Contingency, Damages Sought, Value Short-term Debt, Type [Domain] Short-term Debt, Type [Axis] Additional paid-in capital Counterparty Name [Domain] Counterparty Name [Axis] us-gaap_EscrowDeposit Escrow Deposit Convertible Debt [Member] Earnings Per Share, Policy [Policy Text Block] Convertible Notes Payable [Member] Derivative Instrument [Axis] Income Tax, Policy [Policy Text Block] Product Concentration Risk [Member] Risk free interest rate Concentration Risk Type [Domain] Concentration Risk Type [Axis] Derivative Contract [Domain] us-gaap_AssetsCurrent Total current assets Volatility Fair Value Measurement, Policy [Policy Text Block] Stockholders' Equity Expected life (years) EX-101.PRE 12 psww-20160331_pre.xml EXHIBIT 101.PRE GRAPHIC 13 logo.jpg begin 644 logo.jpg M_]C_X 02D9)1@ ! 0$ 8 !@ #_VP!# (! 0(! 0(" @(" @(" P4# P,# M P8$! ,%!P8'!P<&!P<("0L)" @*" <'"@T*"@L,# P,!PD.#PT,#@L,# S_ MVP!# 0(" @,# P8# P8," <(# P,# P,# P,# P,# P,# P,# P,# P,# P, M# P,# P,# P,# P,# P,# P,# P,# S_P 1" "# 4(# 2( A$! 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Document And Entity Information - shares
3 Months Ended
Mar. 31, 2016
May. 13, 2016
Entity Registrant Name Principal Solar, Inc.  
Entity Central Index Key 0001587476  
Trading Symbol psww  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Well-known Seasoned Issuer No  
Entity Common Stock, Shares Outstanding (in shares)   5,564,258
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Amendment Flag false  
XML 15 R2.htm IDEA: XBRL DOCUMENT v3.4.0.3
Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Construction in Progress [Member]    
Other Assets    
Property Plant and Equipment $ 12,791,661 $ 9,567,324
Cash and equivalents $ 263,871 498,330
Accounts receivable 1,949
Prepaid assets $ 29,154 43,116
Other receivable 1,624,000 1,624,000
Total current assets 1,917,025 2,167,395
Total other assets 12,791,661 9,567,324
Total assets 14,708,686 11,734,719
Current Liabilities    
Accounts payable 1,050,748 513,363
Compensation payable 424,248 390,702
Interest payable 191,604 60,892
Accrued expenses and other liabilities 204,816 97,754
Note payable for insurance premiums 21,099 $ 33,495
Note payable, related party 300,000
Arowana notes payable 8,149,191 $ 5,871,119
Commissions payable 1,540,000 1,540,000
Mediation settlement 800,000 800,000
Liabilities arising from reverse merger 1,003,839 1,003,839
Total current liabilities 13,685,545 10,311,164
Total liabilities $ 13,685,545 $ 10,311,164
Stockholders' Equity    
Preferred stock: $0.01 par value; 2,000,000 shares authorized; 500,000 designated as Series A and 0 shares outstanding at March 31, 2016 and December 31, 2015
Common stock: $0.01 par value, 15,000,000 shares authorized, 5,564,258 shares issued and outstanding at March 31, 2016 and December 31, 2015 $ 55,642 $ 55,642
Additional paid-in capital 12,364,250 12,355,916
Accumulated deficit (11,396,751) (10,988,003)
Total stockholders' equity 1,023,141 1,423,555
Total liabilities and stockholders' equity $ 14,708,686 $ 11,734,719
XML 16 R3.htm IDEA: XBRL DOCUMENT v3.4.0.3
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Series A Preferred Stock [Member]    
Mandatorily redeemable Series A preferred stock, shares designated (in shares) 500,000 500,000
Mandatorily redeemable Series A preferred stock, shares outstanding $ 0 $ 0
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock,shares authorized (in shares) 2,000,000 2,000,000
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 15,000,000 15,000,000
Common stock, shares issued (in shares) 5,564,258 5,564,258
Common stock, shares outstanding (in shares) 5,564,258 5,564,258
XML 17 R4.htm IDEA: XBRL DOCUMENT v3.4.0.3
Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Revenues    
Power generation $ 5,010 $ 184,075
Total revenues $ 5,010 184,075
Cost of revenues    
Depreciation 75,495
Direct operating costs $ 5,024 52,227
Total cost of revenues 5,024 127,722
Gross profit (loss) (14) 56,353
General and administrative expenses 277,557 919,671
Operating loss (277,571) (863,318)
Other expense    
Interest expense $ 131,177 333,474
Loss on derivative liability warrants 19,215
Total other expense $ 131,177 352,689
Loss before provision for income taxes $ (408,748) (1,216,007)
Provision for income taxes (1,233)
Net loss $ (408,748) (1,217,240)
Income attributable to noncontrolling interest in subsidiary 6,483
Net loss attributable to common stockholders $ (408,748) $ (1,223,723)
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) $ (0.07) $ (0.23)
Weighted average shares outstanding, basic and diluted (in shares) 5,564,258 5,435,120
XML 18 R5.htm IDEA: XBRL DOCUMENT v3.4.0.3
Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($)
Employee [Member]
Additional Paid-in Capital [Member]
Employee [Member]
Parent [Member]
Employee [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Parent [Member]
Total
Balance (in shares) at Dec. 31, 2015       5,564,258        
Balance at Dec. 31, 2015       $ 55,642 $ 12,355,916 $ (10,988,003) $ 1,423,555 $ 1,423,555
Stock-based employee compensation expense $ 8,334 $ 8,334 $ 8,334          
Net income           (408,748) (408,748) (408,748)
Balance (in shares) at Mar. 31, 2016       5,564,258        
Balance at Mar. 31, 2016       $ 55,642 $ 12,364,250 $ (11,396,751) $ 1,023,141 $ 1,023,141
XML 19 R6.htm IDEA: XBRL DOCUMENT v3.4.0.3
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Employee [Member]    
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation $ 8,334 $ 341,071
Advisor [Member]    
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation $ 75,000
Arowana Note [Member]    
FINANCING ACTIVITIES    
Proceeds from Arowana note $ 2,278,072
Proceeds from Convertible Debt $ 2,278,072
Alpha Capital Anstalt [Member]    
FINANCING ACTIVITIES    
Proceeds from convertible debenture payable (Alpha) $ 1,250,000
Contractor [Member]    
FINANCING ACTIVITIES    
Proceeds from short-term note, related party $ 300,000
Net loss $ (408,748) $ (1,217,240)
Depreciation 75,494
Loss on derivative liability on warrants 19,215
Amortization of debt discounts 206,480
Accounts receivable $ 1,949 (17,645)
Prepaid assets 13,962 12,875
Accounts payable 537,384 50,551
Compensation payable 33,546 116,500
Interest payable 130,712 32,842
Accrued expenses and other liabilities 107,062 39,567
Net cash provided by (used in) operating activities 424,201 (265,290)
Construction in progress (3,224,336) (2,202,092)
Net cash used in investing activities $ (3,224,336) (2,202,092)
Proceeds from Arowana note 50,000
Proceeds from sale of common stock 1,679,001
Payment of acquisition note payable (62,455)
Proceeds from Convertible Debt 50,000
Payments on note payable for insurance premiums $ (12,396) (16,268)
Change in restricted cash 28,451
Net cash used in financing activities $ 2,565,676 2,928,729
(Decrease) increase in cash and equivalents (234,459) 461,347
Cash and equivalents, beginning of period 498,330 104,328
Cash and equivalents, end of period 263,871 565,675
Supplemental Disclosures    
Interest paid 465 94,152
Income taxes paid $ 0 0
Non-Cash Transactions:    
Discount on covertible debenture recorded as a derivative liability 1,250,000
Construction in progress in accounts payable $ 473,407 349,950
Deposit applied to construction in progress $ 250,000
XML 20 R7.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 1 - Overview
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
NOTE 1 - OVERVIEW
 
Basis of Presentation
 
The unaudited consolidated financial statements and related notes of have been prepared pursuant to Article 8-03 of the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted. In the opinion of management, all adjustments and information (consisting only of normal recurring accruals) considered necessary for a fair presentation of the accompanying unaudited consolidated financial statements have been included.
 
The year-end balance sheet was derived from the Company’s audited financial statements. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the Company’s audited financial statements included in its 2015 Annual Report on Form 10-K. The results of operations for the periods reflected herein are not necessarily indicative of the results to be expected for the full year.
 
Going Concern
 
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2016, the Company has an accumulated deficit of approximately $11.4 million, and the Company has cumulatively had negative cash flows from operations since inception. Further, the Company is not considering any new large utility-scale solar projects at this time. Its ability to continue as a going concern is dependent upon the ability of the Company to collect its amounts receivable and dispose of its remaining development assets under development in order to meet its obligations, pay its liabilities arising from normal business operations when they come due, and potentially develop and execute upon a new business strategy. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
 
Concentration
 
Historically, approximately 96% of our consolidated power generation revenue arose from our Powerhouse One solar installation. The Powerhouse One subsidiary was sold in August 2015.
As of the date of this report, the Company does not have any expectation of replacing the revenue generated by its Powerhouse One subsidiary with any other solar project.
XML 21 R8.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 2 - Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Recent Accounting Pronouncements
 
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)". ASU 2016-02 requires all leases in excess of 12 months to be reported on the balance sheet as a liability based on the net present value of the expected lease payments, and a right-to-use asset for the term of the lease. On the statement of operations, capital leases will continue to be treated as financing transactions, meaning interest and amortization will be included as rent expense. Because interest is calculated on a declining balance over time, the cost of capital leases will look more expensive at the beginning of a lease. Leases that qualify as operating leases will be reported as rent expense. The standard is effective for annual periods beginning after December 15, 2018. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.
 
In March 2016, the FASB issued ASU No. 2016-09
Compensation - Stock Compensation (Topic 718) Improvement to Employee Share-Based Payment Accounting
, which affects the accounting for the income tax consequences of share-based payments, the classifications of awards as either equities or liabilities, and the classification on the statement of cash flows. ASU No. 2016-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those annual periods. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.
 
Principles of Consolidation
 
The Company consolidates the financial position, results of operations, and cash flows of all majority-owned subsidiaries. The consolidated financial statements include the accounts of the Company (including the dba Principal Solar Institute) and its subsidiaries SunGen Mill 77, LLC; SunGen Step Guys, LLC; and Powerhouse One, LLC (through the date of sale, July 1, 2015). All intercompany accounts and transactions have been eliminated in consolidation.
 
Fair Value
 
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.  We believe the carrying values of our current assets and current liabilities approximate their fair values, and the carrying value of our notes payable approximate their estimated fair value for debts with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings.
 
All related party transactions are evaluated by our officers and/or Board of Directors who take into account various factors, including their fiduciary duty to the Company; the relationships of the related parties to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; and the terms the Company could receive from an unrelated third party. Despite this review, related party transactions may not be recorded at fair value.
 
We do not engage in hedging activities, but did have a derivative instrument treated as a liability whose value was measured on a recurring basis (see "Fair Value Instruments" and "Derivative Liability on Warrants" included herein).
 
Fair Value Instruments
 
On March 2, 2015, the Company entered into a convertible debenture with Alpha Capital Anstalt ("Alpha") (See NOTE 6 "Convertible Debenture (Alpha)"). In connection with the loan, the Company granted Alpha complex warrants with certain "down round" protection. As such, they were treated as a derivative liability and were valued using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink® and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time all impacted the value of these warrants. The Company re-valued these warrants at the end of each reporting period and any changes are reflected as gains or losses in current period results. (See NOTE 10 - DERIVATIVE LIABILITY ON WARRANTS). In August 2015, all principal and interest pursuant to the convertible debenture was paid in full thus eliminating the terms giving rise to a potential down round price adjustment of the warrants. As such, a final re-valuation as of the repayment date was recorded and the warrants are now considered equity instruments.
 
Use of Estimates
 
The preparation of our financial statements in accordance with GAAP requires us to, on an ongoing basis, make significant estimates and judgments that affect the reported values of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities.  We base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances, the results of which form the basis for our conclusions.  Actual results may differ from these estimates under different assumptions or conditions.  Such differences could have a material impact on our future financial position, results of operations, and cash flows.
 
Cash and Equivalents
 
We consider cash, deposits, and short-term investments with original maturities of three months or less as cash and equivalents.  Our deposits are maintained primarily in two financial institutions and, at times, may exceed amounts covered by U.S. Federal Deposit Insurance Corporation insurance.
 
Accounts Receivable
 
Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of individual accounts. No allowance has been recorded in the accompanying financial statements.
 
Other Receivable
 
Other receivable reflects the remaining amount due from the August 2015 assignment of Principal Sunrise IV. Payable by the assignee at the project's commercial operation date ("COD"), the project is expected to reach COD in June 2016. No allowance has been recorded against the receivable.
 
Construction in Progress
 
The Company records as construction in progress those items of a capital and expense nature necessary to develop, construct, and place into service a solar project. Such costs consists primarily of the cost of the project company's acquisition rights, equipment costs, interconnection costs, and the costs of independent engineers, valuation firms, and rent, property taxes, financing costs, and insurance during the construction period.
 
Long-Lived Assets
 
The recoverability of the carrying value of long-lived assets is assessed when an indicator of impairment has been identified.
 
For purposes of recognition and measurement of an impairment loss, a long-lived asset or group of assets is combined with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
 
For long-lived assets, when impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If undiscounted cash flows are less than carrying value, the excess of carrying value over fair value is expensed in the period in which it is estimated to have occurred.
 
Revenue Recognition
 
Power generation revenue is recognized as delivered to the purchaser based upon electrical meters affixed to the solar array and measuring kilowatt-hours produced. Our current power generation operations do not generate renewable energy credits, performance-based incentives, or similar credits to the benefit of the Company.
 
Income Taxes
 
Income taxes are recorded under the asset and liability method under which deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
 
Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in our consolidated financial statements. Income tax returns are subject to a three-year statute of limitations during which they are subject to audit and adjustment. We file income tax returns in the United States federal jurisdiction and certain states.
 
 
Equity Transaction Fair Values
 
The estimated fair value of our $.01 par value common stock ("Common Stock") issued in share-based payments is measured by the more relevant of (1) the prices received in private placement sales of our stock or (2) the Company's publically-quoted market price.  We estimate the fair value of simple warrants and stock options when issued or, in the case of issuances to non-employees, when vested, using the Black-Scholes option-pricing ("Black-Scholes") model that requires the input of subjective assumptions.  When valuing more complex warrants, options, or other derivative equity instruments, we use a binomial lattice-based option pricing model or Monte Carlo option pricing model, whichever management deems more appropriate under the circumstances. Recognition in stockholders’ equity and expense of the fair value of stock options awarded to employees is on the straight-line basis over the requisite service period.  Subsequent changes in fair value are not recognized.
 
Net Loss per Share
 
Basic net income or loss per share is computed by dividing the net income or loss for the period by the weighted average number of shares of Common Stock outstanding for the period. Diluted income per share reflects the potential dilution of derivative securities by including other potential issuances of Common Stock including shares to be issued upon exercise of options and warrants and upon conversion of convertible debt. Potentially dilutive shares are not included in the event of a loss as the effect of doing so would be anti-dilutive. As of March 31, 2016, options to purchase 794,816 shares, and warrants to purchase 550,434 shares of our Common Stock have been excluded from the calculation of diluted loss per share, as their effect would have been anti-dilutive. As of March 31, 2015, options to purchase 765,590 shares and warrants to purchase 276,513 shares of our Common Stock, and 467,500 shares issuable upon the conversion of convertible notes payable have been excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive.
XML 22 R9.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 3 - Liabilities Arising from Reverse Merger
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Other Liabilities Disclosure [Text Block]
NOTE 3 - LIABILITIES ARISING FROM REVERSE MERGER
 
Liabilities arising from the reverse merger represent long term real estate leases which had been abandoned, general unsecured liabilities, commercial liens, and tax liens filed with various states all associated with the Company’s pre-reverse merger operations, which were unknowingly assumed in the March 2011 reverse merger transaction. The statute of limitations for most of such liabilities is five years and for most liens is ten years, subject to renewal at the lien holders’ option, depending upon the jurisdiction.  Although the liens accrue interest at between 8% and 12% per year, the Company has ceased accruing interest as it believes the liability recorded to date is adequate to cover the ultimate claims that may, one day, be presented. Liabilities not associated with a lien have been accrued based upon management’s estimation of the amount to be paid.  Liabilities associated with a lien have been accrued at face value.  Management believes all such liabilities have been indemnified by Pegasus Funds, LLC (and/or its affiliates or related parties, "Pegasus") to which (including its assigns) the Company issued 534,654 shares of its Common Stock as part of the reverse merger transaction.  However, as the Company is obligor, the Company has recorded the liability.  To date, only one lien holder has approached the Company concerning payment.  Such lien holder is pursuing the former management of the Company first through litigation.  To the extent such lien holder recovers the liability from the former management, the lien against the Company will be reduced.
 
In March 2015, the Company entered into a settlement agreement with Pegasus regarding its indemnification of the Company in regards to the legacy liabilities. In the settlement agreement, the Company agreed to accept the return of 215,154 shares of the original 534,654 shares of its Common Stock issued to Pegasus and its principals and affiliates in acquiring the shell company, Kupper Parker Communications, Inc., which later became Principal Solar, Inc. As the shares of Common Stock were initially issued in a common stock for preferred stock share exchange with Pegasus, the shares returned by Pegasus will be cancelled without further accounting recognition. The cancellation of 50,000 of the shares was effected in December 2015, and the remaining will be recognized for accounting purposes once they are received from Pegasus.
 
In the settlement with Pegasus, the Company preserved its rights to pursue the individual(s) serving as officers of Kupper Parker Communications, Inc. who, prior to the exchange of shares, had agreed in the Exchange Agreement to "satisfy and assume liability for the payment of any additional liabilities not identified" in the agreement. In April 2015, the Company filed a lawsuit against the remaining individual serving as an officer of Kupper Parker Communications, Inc. prior to the exchange of shares seeking an amount of $991,371 plus accruing interest and legal fees. Any recovery from the lawsuit is uncertain at this time, and such recovery would in no way diminish our potential obligation to third parties.
XML 23 R10.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 4 - Compensation Payable
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Compensation Related Costs, General [Text Block]
NOTE 4 - COMPENSATION PAYABLE
 
Certain members of the management team have deferred payment of their compensation for the benefit of the Company.  No interest is accrued on such deferral and no formal terms of payment have been established.
 
XML 24 R11.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 5 - Disposal of Assets
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Impairments or Disposal of Long-Lived Assets [Text Block]
NOTE 5 - DISPOSAL OF ASSETS
 
Disposition of Principal Sunrise V (aka IS 42)
 
The Company is negotiating to assign its interest in Principal Sunrise V to a buyer contingent upon the assignee's ability to secure the necessary tax equity and debt financing (approximately $108 million combined) to build and operate the project. Tax equity is defined as temporary equity invested whose primary source of return is monetizing the tax attributes of the underlying investment ("tax equity"). The parties have selected a date of June 30, 2016, to secure the financing and close the transaction, and such date may be extended by the parties. If completed, under the assignment agreement the Company would be repaid its cumulative investment through the closing date ($5.1 million at March 31, 2016) and a separate development fee up to $4.0 million. As a part of the assignment, the Company guaranteed the assignee a 10% after-tax rate of return, with any deficit being deducted from the development fee to be received by the Company. Due to its variable nature, the ultimate development fee received by the Company is expected to range between $0 and $4 million to be paid incrementally between closing and COD as the costs to construct the project become more certain. As a part of the transaction, the assignee has agreed to fund a portion of the development costs between signing and closing through a loan to the Company of up to $333 thousand, and the project seller has agreed to be paid their balance due at closing, both lessening the monthly cash burden to the Company.
 
There can be no assurance the assignment of Principal Sunrise V will be closed or closed upon the terms described above, and failure to close or to close timely would result in a loss of the Company's investment to date.
XML 25 R12.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 6 - Notes Payable
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Debt Disclosure [Text Block]
NOTE 6 - NOTES PAYABLE
 
Acquisition Note Payable
 
On June 17, 2013, Powerhouse One, LLC secured financing of $5,050,000 from Bridge Bank, National Association ("Bridge Bank") to acquire the membership interest (and the underlying solar arrays) of co-sellers, Vis Solis, Inc., a Tennessee limited liability company, and AstroSol, Inc., a Tennessee corporation. The note bore a fixed interest rate of 7.5% annually. In August 2015, as a part of the disposal of Powerhouse One, all principal and interest pursuant to the Acquisition Note Payable was paid in full.
 
In conjunction with the acquisition note payable, warrants to purchase 37,763 shares of Common Stock were issued to Bridge Bank with an exercise price of $4.00 and a contractual life of 10 years. The value of the warrants issued in connection with this debt, as determined using the Black-Scholes model, was $81,449 and was recorded as a discount to the debt. Amortization expense was $0 and $5,091 for the three months in 2015 and 2014, respectively.
 
The Bridge Bank warrants have cashless exercise rights, redemption rights providing the Company the right to redeem the warrants for $604,200, anti-dilution rights associated with subsequent offerings of equity securities, a term expiring on the first to occur of (i) the 10 year anniversary of the grant, (ii) the closing of the Company’s initial public offering, or (iii) the liquidation of the Company (each a “Termination Event”). In each case, unless exercised earlier, the warrants are automatically exercised on a cashless basis upon a Termination Event.  The Company also provided the holder registration rights in connection with the grant of the warrants.
 
Convertible Debenture (Alpha)
 
On March 2, 2015, the Company entered into a convertible debenture with Alpha to borrow $1,250,000. In August 2015, all principal and interest pursuant to the convertible debenture was paid in full. Amortization of the discount and interest expense recognized during the three months in 2015 totaled $209,722.
 
Notes Payable, Related Parties
 
In June 2014, the Company issued convertible notes of $250,000 each to two of its Board members, Messrs. Heller and Marmol, to fund deposits on potential future acquisitions. In August 2015, all principal and interest pursuant to the convertible notes were paid in full.
 
In December 2014, Michael Gorton, the Company's Chief Executive Officer, loaned to the Company pursuant to a convertible note $130,000. In August 2015, all principal and interest pursuant to the convertible note was paid in full.
 
In March 2016, a trust maintained by a contractor to the Company made a short-term unsecured loan to the Company in the amount of $300,000 under a short-term promissory note. The note bore a flat fee of $45,000 that was recorded as interest expense, and matures on June 24, 2016. Amounts outstanding beyond the maturity date bear interest at a rate of 12% per annum. Proceeds from the loan were used primarily for development costs of Principal Sunrise V.
 
Interest expense for the notes payable, related parties, recognized during the three months in 2016 and 2015 totaled $45,000 and $18,641, respectively.
 
Convertible Note
Payable
, Non-Related Party
 
In January 2015, the Company issued a convertible note to an unrelated party in the amount of $50,000. In August 2015, all principal and interest pursuant to the convertible note was paid in full. Interest expense for the notes payable, non-related party, recognized during the three months in 2015 totaled $1,266.
 
Arowana
Notes
 
Additional Projects
 
On August 20, 2015, the Company issued a promissory note and security agreement to Arowana International Limited ("Arowana") in the original principal amount of $1,600,000. The note matures on December 31, 2016, and bears simple interest at the rate of 6% per annum (the "Arowana Note"). The note is convertible, at the option of the holder, into membership interests in our Principal Sunrise V project based upon a valuation not yet determinable.
 
The Company used the proceeds from the Arowana Note to make investments in two additional projects totaling 68MW AC ("Additional Projects"). The first of the two projects, 34.2MW AC in North Carolina, should begin construction in the second quarter of 2016 and is expected to be completed in the fourth quarter of 2016. The second of the two projects, 33.8 MW AC also in North Carolina, is approximately 6 weeks behind the first. The Additional Projects serve as collateral for the Company’s obligations under the Arowana Note, which is otherwise unsecured and non-recourse to the Company.
 
Arowana continues to fund the development costs of the Additional Projects and, at March 31, 2016, the cumulative investment in the Additional Projects totaled $7.8 million, and the balance of the Arowana Note was $7.9 million, including interest. There can be no assurance Arowana will continue funding the two projects and failing to do so could, depending upon the finality, timing, and proceeds from the assignment of Principal Sunrise V, could cause the related power purchase agreements to be in default, resulting in a loss of all amounts invested to date.
 
Principal Sunrise V
 
Effective November 25, 2015, the Company issued a promissory note to Arowana in the principal amount of $269,688. The note matures on December 31, 2016, and bears simple interest at the rate of 12% per annum (the "Second Arowana Note").
 
The Company used the proceeds from the Second Arowana Note to make an interconnection payment for Principal Sunrise V, and the note is secured by proceeds from the expected disposition of the project.
XML 26 R13.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 7 - Commissions Payable
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Commission Payable [Text Block]
NOTE
7
-
COMMISSIONS PAYABLE
 
Carlyle Capital Markets, Inc.
 
In December 2013, the Company engaged Carlyle Capital Markets, Inc. and its affiliate, Friedman, Luzzatto & Co. (together "CCMI"), to assist it in identifying sources of and securing financing for its solar projects to be built. CCMI is a firm of three professionals having its sole office in Dallas, Texas and, though having a similar name, is not affiliated with the well-known and respected firm, The Carlyle Group, headquartered in Washington, D.C.
 
In more than 20 months, CCMI was unable to arrange financing of any type or amount and was unable to even generate enough interest to produce a financing proposal from a prospective investor or lender. With CCMI failing its promise, the Company raised money on its own to maintain operations and further its solar development efforts. Despite CCMI's failure to secure even a single financing proposal (let alone a proposal acceptable to the Company), and despite CCMI having no involvement in non-project related financing efforts undertaken by the Company, CCMI claimed an entitlement to extensive fees.
 
Initially set for arbitration in February 2016, the parties mediated the matter instead in November 2015 and settled with the Company paying CCMI $1.7 million in connection with the August 2015 assignment of Principal Sunrise IV. Funds to pay the settlement came from the $2.5 million escrow deposit established concurrent with the assignment of the project. Additionally, the Company agreed to pay CCMI 10% of any proceeds from financing or disposition of Principal Sunrise V (aka IS 42), should such event take place on or before July 30, 2016. The Company had accrued a Commission payable of $600 thousand at December 31, 2015, based upon its expected proceeds from the disposition of Principal Sunrise V, and funds to pay this later amount are expected to come from the financing or disposition of Principal Sunrise V.
 
Vis Solis, Inc.
 
In November 2014, the Company entered into a services agreement (the “Services Agreement”) with Vis Solis, Inc. ("VIS"), the minority interest holder of our former Powerhouse One subsidiary, wherein VIS would refer to the Company "economically viable solar generation projects" for acquisition; identify and source engineering procurement and construction firms; identify and source operations and maintenance contractors; among other things necessary to build, own, and operate solar projects. In exchange for its services, VIS would be compensated from the construction and permanent financing arranged by the Company based upon the installed kilowatts of each project the Company accepted, took under contract, and put into commercial operation. Any compensation owing to VIS from the Company under the Services Agreement would be due either at the project’s "Financial Close" or its COD.
 
In August 2015, the Company assigned its contractual rights to develop, finance, and put into commercial operation its project Principal Sunrise IV to Carolina Energy Partners II, LLC (“CEP”) as the Company had been unable to arrange either construction or permanent financing for this project.
 
In January 2016, the Company and VIS mediated the matter and reached a settlement wherein the Company will pay VIS $900 thousand to settle all matters between the parties and terminate the original agreement. As a part of its gain on sale and assignment of assets, the Company had accrued a commission payable of $900 thousand at December 31, 2015, and funds to pay such amount are expected to come from the earlier of COD of Principal Sunrise IV (upon which the Company expects to receive $1.6 million) or the disposition of Principal Sunrise V, if any.
XML 27 R14.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 8 - Mediation Settlement
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Mediation Settlement [Text Block]
NOTE
8
-
MEDIATION SETTLEMENT
 
TCH Principal Solar, LP
 
In March 2015, TCH Principal Solar, LP ("TCH") made two equity investments in our Common Stock (March 5th and 25th) of $500 thousand each. In September 2015, it notified the Company it had realized the Company had completed an issuance of debt securities to Alpha, including warrants, immediately before its first equity investment in March and that TCH wanted an "equal deal" despite the disparity of security instruments and other terms. The Company responded to the notice with a list of questions and such questions went unanswered by TCH.
 
In January 2016, TCH demanded mediation to resolve the matter and the mediation occurred on March 3, 2016. The parties have agreed the Company would pay TCH an amount of $300 thousand and 10% of the proceeds from the disposition of Principal Sunrise V, if and when such occurs, with the total payment not to exceed $800 thousand. The Company had accrued an $800 thousand Mediation settlement at December 31, 2015, and funds to pay such amount are expected to come from proceeds from the disposition of Principal Sunrise V.
XML 28 R15.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 9 - Leases
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Leases of Lessee Disclosure [Text Block]
NOTE 9 - LEASES
 
The Company's solar array sits on a rooftop subject to a service agreement with initial terms equal to the energy sales agreement and having one or more renewal options. There are no separate rental payments in the case of rooftop installations. The Company's current solar array installations is as follows:
 
Installation
Location
kW
Date
Term
Rent
SunGen StepGuys
Alfred, ME
110
Sep 2009
25 yr. +
None
        2 - 25-yr renewals  
 
Rent expense for Powerhouse One was $6,645 during the three months in 2015.
 
In each case, the Company is obligated to remove such installations at the end of the lease terms. As the expected termination dates are decades off, there is little experience de-installing solar arrays anywhere in the world, and costs are expected to be minimal, such removal costs have not been separately accounted for.
XML 29 R16.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 10 - Derivative Liability on Warrants
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Derivatives and Fair Value [Text Block]
NOTE 10 - DERIVATIVE LIABILITY ON WARRANTS
 
On March 2, 2015, the Company issued warrants to purchase 234,375 shares of Common Stock with a 66-month contractual term to Alpha in connection with the issuance of convertible debentures (See NOTE 6 "Convertible Debenture (Alpha)"). The warrants were immediately exercisable into the Company’s Common Stock with an exercise price of $6.00 per share.
 
However, as the warrants had “down round” protection, they were treated as a derivative liability and were valued each period using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink
®
and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time all impacted the value of these warrants. On May 6, 2015, the Company issued Series A Preferred stock (NOTE 11 “Preferred Stock”) resetting the exercise price of the warrants to $4.00 per share, and the valuation was updated and reflected in the balance sheet.
 
Input assumptions on the issuance date were as follows:
 
Estimated fair value
  $ 6.77  
Expected life (years)
    5.51  
Risk free interest rate
    1.65 %
Volatility
    146.11 %
 
In this issuance of convertible debentures and warrants, completed as a result of arm's length negotiations between unrelated parties, the value of the warrants alone exceeded the proceeds received. The Company's need for ongoing financing made the transaction attractive, despite the economics of the transaction. The application
of
GAAP, resulted in a loss on the date of issuance of $336,884, offset by a subsequent gain of $317,669 stemming from the subsequent movement in the price of our Common Stock, together resulting in a net gain on derivative liability warrants of $19,215 for the period ended March 31, 2015.
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Note 11 - Capital Stock
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
NOTE 11 – CAPITAL STOCK
 
Preferred Stock
 
At December 31, 2015, the Company had authorized 2,000,000 shares of $.01 par value Class A preferred stock.
 
 
Common Stock
 
At December 31, 2015, the Company had authorized 15,000,000 shares of $.01 par value Common Stock, and it trades on the OTC Pink
®
under the symbol “PSWW.”  Holders of our Common Stock are entitled to one vote per share and receive dividends or other distributions when, and if, declared by our Board of Directors.  In addition to shares outstanding, we have reserved 966,090 shares for issuance upon exercise of equity incentive awards with options to purchase 794,816 shares of Common Stock outstanding at March 31, 2016.
 
Restricted Stock
 
In January 2015, the Company awarded to an engineering firm, in exchange for its services on Principal Sunrise IV, 12,500 restricted shares pursuant to the 2014 Equity Incentive Plan. The value of the shares on the date of grant totaled $37,500 and the amount was capitalized as construction in progress.
 
Stock Options
 
The Company maintains the
2014 Equity Incentive Plan
(the "Plan"), pursuant to which 794,816 of the total 966,090 shares of Common Stock reserved have been issued to date. The exercise of options, if any, will result in the issuance of new share by the Company.
 
20
16
Issuances
 
There have been no issuances in 2016.
 
20
15
Issuances
 
In February 2015, the Company granted options to purchase 6,250 shares of Common Stock having an exercise price of $6.00 per share, a 10-year term, and immediate vesting to each of five directors as a discretionary bonus. The Company also granted in February 2015, options to acquire 6,000 shares of Common Stock to each of two advisors. The options have an exercise price of $6.00 per share, immediate vesting, and expiration dates extending to 5-years based upon their continued service of two years from the grant date. Finally, the Company granted to a consultant in February 2015, options to acquire 6,250 shares of Common Stock. The options have an exercise price of $6.00 per share, immediate vesting, and expiration dates extending to 10-years based upon continued service of three years from the date of grant.
 
In each case above, the options were valued using the Black-Scholes model, and the resulting equity-based compensation expense included in general and administrative expense was $0 and $37,500 for the periods ended March 31, 2016 and March 31, 2015, respectively.
 
As the Company does not have a significant history of post vesting exercises to estimate an expected life of the option, the simplified method was used wherein the expected life becomes the mid-point of the options vesting date and their contractual life. The valuation of all of the option issuances in 2015 were based upon the following parameters:
 
Estimated fair value
    $6.00  
Expected life (years)
  2.5 to 5.0
Risk free interest rate
  .052% to 1.58%
Volatility
  146% to 207%
 
 
As the Company does not have a significant history of post vesting exercises to estimate an expected life of the option, the simplified method was used wherein the expected life becomes the mid-point of the options vesting date and their contractual life.
 
Warrants
 
The Company had 550,434 warrants outstanding at March 31, 2016, with a weighted average term of 4.3 years and a weighted average exercise price of $5.86 per share.
XML 31 R18.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 12 - Noncontrolling Interest
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Noncontrolling Interest Disclosure [Text Block]
NOTE 12 - NONCONTROLLING INTEREST
 
Prior to its sale effective July 1, 2015, the original owners of Powerhouse One continued to own approximately 11% of the membership interest of the limited liability company. The noncontrolling interests of equity investors in Powerhouse One was reported on the consolidated balance sheet and statement of operations as "Noncontrolling interest in subsidiary" ("noncontrolling interest") and reflected their respective interests in the equity and the income or loss of the limited liability company.
XML 32 R19.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 13 - Related Party Transactions
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]
NOTE 13 – RELATED PARTY TRANSACTIONS
 
Other than the Board member options described herein in a NOTE 11 "Stock Options”, and the issuance of convertible notes described herein in the NOTE 6 "Notes Payable, Related Parties", no other related party transactions occurred during 2016 and 2015.
XML 33 R20.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 14 - Taxes
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
NOTE 14 - TAXES
 
Our estimated $13.3 million federal income tax net operating loss carryover expires over the period from 2030 through 2035. Our federal and state income tax returns are not under examination by any taxing authorities and no statute extensions have been granted; therefore, only our December 31, 2012 to 2015 tax returns are subject to examination.
 
Management has evaluated all tax positions and determined that no uncertain tax positions exist at this time. As a result, no amounts have been recorded related to a tax position more likely than not to be sustained. The Company classifies interest and penalties related to income taxes, if any, as interest expense and general and administrative costs, respectively, in our consolidated financial statements.
 
The Company has established a valuation allowance to fully reserve the net deferred tax assets for all periods due to the uncertainty of the timing and amounts of future taxable income.
XML 34 R21.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 15 - Commitments and Contingencies
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
NOTE 15 - COMMITMENTS AND CONTINGENCIES
 
Contingent
Obligation
 
In connection with the assignment of Principal Sunrise IV (see NOTE 5 "DISPOSAL OF ASSETS"), the Company became contingently liable to the solar project's original developer in the amount of $600,000, if and only if the assignee of the Company's rights to that project fails to pay the original developer a like amount at the commercial operation date. No liability has been recorded in the financial statements as the failure of the assignee to pay the amount when due is not probable.
 
Stueben Investment
 
Effective June 14, 2013, the Company entered into a Subscription Agreement with Steuben Investment Company II, L.P. (“Steuben”).  Pursuant to the subscription agreement, Steuben purchased 727,273 shares of the Company’s Common Stock for an aggregate of $1,600,000 or $2.20 per share. As additional consideration in connection with the subscription, the Company granted Steuben warrants to purchase 545,455 shares of the Company’s Common Stock with an exercise price of $4.00 per share and a term of 10 years.  The Company also provided Steuben registration rights whereby the Company was required to file a registration statement and take all necessary actions to maintain the availability of Rule 144 for a period of two years following its effective date. The registration statement became effective on February 3, 2015.
 
In the event we fail to take all necessary actions to enable Steuben to sell shares pursuant to Rule 144, we may have to pay to Steuben penalties totaling $216,000 which could have a material adverse effect on our available cash, limit our ability to raise capital, and negatively impact our results of operations. The Company has not accrued a liability for this potential penalty, as it believes the payment of any such penalty is not probable.
XML 35 R22.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 16 - Subsequent Events
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Subsequent Events [Text Block]
NOTE 16 - SUBSEQUENT EVENTS
 
Note Payable, Related Party
 
In April 2016, a trust maintained by the Company's Director, Guillermo Marmol, made a short-term unsecured loan to the Company in the amount of $200,000. The promissory note bore a fee of 15% of the face amount, matures at the earlier of i) the financial closing of the disposition of Principal Sunrise V, ii) the receipt of remaining amounts due from the August 2015 assignment of Principal Sunrise IV, or iii) July 29, 2016. Amounts outstanding beyond the maturity date bear interest at a rate of 10% compounded daily. Proceeds were used primarily to pay development costs of the Principal Sunrise V project.
 
The note is i) subordinated to payment of amounts due under that certain settlement reached with Vis Solis (See NOTE 7 Commissions Payable - Vis Solis); ii) pari pasu to repayment of amounts outstanding under that certain promissory note with a trust maintained by a contractor to the Company; and iii) senior to all other unsecured debts of the Company.
XML 36 R23.htm IDEA: XBRL DOCUMENT v3.4.0.3
Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
New Accounting Pronouncements, Policy [Policy Text Block]
Recent Accounting Pronouncements
 
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)". ASU 2016-02 requires all leases in excess of 12 months to be reported on the balance sheet as a liability based on the net present value of the expected lease payments, and a right-to-use asset for the term of the lease. On the statement of operations, capital leases will continue to be treated as financing transactions, meaning interest and amortization will be included as rent expense. Because interest is calculated on a declining balance over time, the cost of capital leases will look more expensive at the beginning of a lease. Leases that qualify as operating leases will be reported as rent expense. The standard is effective for annual periods beginning after December 15, 2018. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.
 
In March 2016, the FASB issued ASU No. 2016-09
Compensation - Stock Compensation (Topic 718) Improvement to Employee Share-Based Payment Accounting
, which affects the accounting for the income tax consequences of share-based payments, the classifications of awards as either equities or liabilities, and the classification on the statement of cash flows. ASU No. 2016-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those annual periods. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.
Consolidation, Policy [Policy Text Block]
Principles of Consolidation
 
The Company consolidates the financial position, results of operations, and cash flows of all majority-owned subsidiaries. The consolidated financial statements include the accounts of the Company (including the dba Principal Solar Institute) and its subsidiaries SunGen Mill 77, LLC; SunGen Step Guys, LLC; and Powerhouse One, LLC (through the date of sale, July 1, 2015). All intercompany accounts and transactions have been eliminated in consolidation.
Fair Value Measurement, Policy [Policy Text Block]
Fair Value
 
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.  We believe the carrying values of our current assets and current liabilities approximate their fair values, and the carrying value of our notes payable approximate their estimated fair value for debts with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings.
 
All related party transactions are evaluated by our officers and/or Board of Directors who take into account various factors, including their fiduciary duty to the Company; the relationships of the related parties to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; and the terms the Company could receive from an unrelated third party. Despite this review, related party transactions may not be recorded at fair value.
 
We do not engage in hedging activities, but did have a derivative instrument treated as a liability whose value was measured on a recurring basis (see "Fair Value Instruments" and "Derivative Liability on Warrants" included herein).
 
Fair Value Instruments
 
On March 2, 2015, the Company entered into a convertible debenture with Alpha Capital Anstalt ("Alpha") (See NOTE 6 "Convertible Debenture (Alpha)"). In connection with the loan, the Company granted Alpha complex warrants with certain "down round" protection. As such, they were treated as a derivative liability and were valued using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink® and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time all impacted the value of these warrants. The Company re-valued these warrants at the end of each reporting period and any changes are reflected as gains or losses in current period results. (See NOTE 10 - DERIVATIVE LIABILITY ON WARRANTS). In August 2015, all principal and interest pursuant to the convertible debenture was paid in full thus eliminating the terms giving rise to a potential down round price adjustment of the warrants. As such, a final re-valuation as of the repayment date was recorded and the warrants are now considered equity instruments.
Use of Estimates, Policy [Policy Text Block]
Use of Estimates
 
The preparation of our financial statements in accordance with GAAP requires us to, on an ongoing basis, make significant estimates and judgments that affect the reported values of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities.  We base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances, the results of which form the basis for our conclusions.  Actual results may differ from these estimates under different assumptions or conditions.  Such differences could have a material impact on our future financial position, results of operations, and cash flows.
Cash and Cash Equivalents, Policy [Policy Text Block]
Cash and Equivalents
 
We consider cash, deposits, and short-term investments with original maturities of three months or less as cash and equivalents.  Our deposits are maintained primarily in two financial institutions and, at times, may exceed amounts covered by U.S. Federal Deposit Insurance Corporation insurance.
Receivables, Policy [Policy Text Block]
Accounts Receivable
 
Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of individual accounts. No allowance has been recorded in the accompanying financial statements.
 
Other Receivable
 
Other receivable reflects the remaining amount due from the August 2015 assignment of Principal Sunrise IV. Payable by the assignee at the project's commercial operation date ("COD"), the project is expected to reach COD in June 2016. No allowance has been recorded against the receivable.
Property, Plant and Equipment, Policy [Policy Text Block]
Construction in Progress
 
The Company records as construction in progress those items of a capital and expense nature necessary to develop, construct, and place into service a solar project. Such costs consists primarily of the cost of the project company's acquisition rights, equipment costs, interconnection costs, and the costs of independent engineers, valuation firms, and rent, property taxes, financing costs, and insurance during the construction period.
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]
Long-Lived Assets
 
The recoverability of the carrying value of long-lived assets is assessed when an indicator of impairment has been identified.
 
For purposes of recognition and measurement of an impairment loss, a long-lived asset or group of assets is combined with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
 
For long-lived assets, when impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If undiscounted cash flows are less than carrying value, the excess of carrying value over fair value is expensed in the period in which it is estimated to have occurred.
Revenue Recognition, Policy [Policy Text Block]
Revenue Recognition
 
Power generation revenue is recognized as delivered to the purchaser based upon electrical meters affixed to the solar array and measuring kilowatt-hours produced. Our current power generation operations do not generate renewable energy credits, performance-based incentives, or similar credits to the benefit of the Company.
Income Tax, Policy [Policy Text Block]
Income Taxes
 
Income taxes are recorded under the asset and liability method under which deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
 
Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in our consolidated financial statements. Income tax returns are subject to a three-year statute of limitations during which they are subject to audit and adjustment. We file income tax returns in the United States federal jurisdiction and certain states.
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]
Equity Transaction Fair Values
 
The estimated fair value of our $.01 par value common stock ("Common Stock") issued in share-based payments is measured by the more relevant of (1) the prices received in private placement sales of our stock or (2) the Company's publically-quoted market price.  We estimate the fair value of simple warrants and stock options when issued or, in the case of issuances to non-employees, when vested, using the Black-Scholes option-pricing ("Black-Scholes") model that requires the input of subjective assumptions.  When valuing more complex warrants, options, or other derivative equity instruments, we use a binomial lattice-based option pricing model or Monte Carlo option pricing model, whichever management deems more appropriate under the circumstances. Recognition in stockholders’ equity and expense of the fair value of stock options awarded to employees is on the straight-line basis over the requisite service period.  Subsequent changes in fair value are not recognized.
Earnings Per Share, Policy [Policy Text Block]
Net Loss per Share
 
Basic net income or loss per share is computed by dividing the net income or loss for the period by the weighted average number of shares of Common Stock outstanding for the period. Diluted income per share reflects the potential dilution of derivative securities by including other potential issuances of Common Stock including shares to be issued upon exercise of options and warrants and upon conversion of convertible debt. Potentially dilutive shares are not included in the event of a loss as the effect of doing so would be anti-dilutive. As of March 31, 2016, options to purchase 794,816 shares, and warrants to purchase 550,434 shares of our Common Stock have been excluded from the calculation of diluted loss per share, as their effect would have been anti-dilutive. As of March 31, 2015, options to purchase 765,590 shares and warrants to purchase 276,513 shares of our Common Stock, and 467,500 shares issuable upon the conversion of convertible notes payable have been excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive.
XML 37 R24.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 9 - Leases (Tables)
3 Months Ended
Mar. 31, 2016
Notes Tables  
Operating Leases of Lessee Disclosure [Table Text Block]
Installation
Location
kW
Date
Term
Rent
SunGen StepGuys
Alfred, ME
110
Sep 2009
25 yr. +
None
        2 - 25-yr renewals  
XML 38 R25.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 10 - Derivative Liability on Warrants (Tables)
3 Months Ended
Mar. 31, 2016
Notes Tables  
Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]
Estimated fair value
  $ 6.77  
Expected life (years)
    5.51  
Risk free interest rate
    1.65 %
Volatility
    146.11 %
XML 39 R26.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 11 - Capital Stock (Tables)
3 Months Ended
Mar. 31, 2016
Warrant [Member]  
Notes Tables  
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]
Estimated fair value
    $6.00  
Expected life (years)
  2.5 to 5.0
Risk free interest rate
  .052% to 1.58%
Volatility
  146% to 207%
XML 40 R27.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 1 - Overview (Details Textual) - USD ($)
1 Months Ended
Aug. 31, 2015
Mar. 31, 2016
Dec. 31, 2015
Power Generation Revenue [Member] | Power Purchase Agreements [Member] | Product Concentration Risk [Member]      
Concentration Risk, Percentage 96.00%    
Retained Earnings (Accumulated Deficit)   $ (11,396,751) $ (10,988,003)
XML 41 R28.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Employee Stock Option [Member]      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 794,816 765,590  
Warrant [Member]      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 550,434 276,513  
Convertible Debt Securities [Member]      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount   467,500  
Allowance for Doubtful Accounts Receivable     $ 0
Common Stock, Par or Stated Value Per Share $ 0.01   $ 0.01
XML 42 R29.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 3 - Liabilities Arising from Reverse Merger (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Apr. 30, 2015
Mar. 31, 2016
Dec. 31, 2015
Minimum [Member]      
Interest Rate Accrual Commercial and Tax Liens Percent   8.00%  
Maximum [Member]      
Interest Rate Accrual Commercial and Tax Liens Percent   12.00%  
Pegasus Funds LLC [Member]      
Stock Issued During Period Shares Reverse Merger   534,654  
Weighted Average Number of Shares, Common Stock Subject to Repurchase or Cancellation   215,154  
Stock Returned and Retired During Period, Shares     50,000
Officers of Kupper Parker Communications [Member]      
Loss Contingency, Damages Sought, Value $ 991,371    
XML 43 R30.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 4 - Compensation Payable (Details Textual)
Mar. 31, 2016
USD ($)
Management [Member]  
Interest Payable $ 0
XML 44 R31.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 5 - Disposal of Assets (Details Textual) - PS V [Member]
3 Months Ended
Mar. 31, 2016
USD ($)
Minimum [Member]  
Development Fee $ 0
Maximum [Member]  
Development Fee 4,000,000
Disposal Group, Required Secured Tax Equity and Debt Amount 108,000,000
Equity Method Investment, Realized Gain (Loss) on Disposal 5,100,000
Development Fee $ 4,000,000
Debt Instrument, Interest Rate, Stated Percentage 10.00%
Loan to Fund Development Costs, Maximum $ 333,000
XML 45 R32.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 6 - Notes Payable (Details Textual) - USD ($)
3 Months Ended
Dec. 01, 2014
Jun. 30, 2014
Jun. 17, 2013
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2014
Dec. 31, 2015
Nov. 25, 2015
Aug. 20, 2015
Mar. 02, 2015
Jan. 31, 2015
Bridge Bank National Association [Member] | Powerhouse One LLC [Member]                      
Debt Instrument, Face Amount     $ 5,050,000                
Debt Instrument, Interest Rate, Stated Percentage     7.50%                
Bridge Bank National Association [Member]                      
Class of Warrant or Right, Number of Securities Called by Warrants or Rights     37,763                
Class of Warrant or Right, Exercise Price of Warrants or Rights     $ 4                
Class of Warrant or Right Outstanding Contractual Life     10 years                
Debt Instrument, Unamortized Discount     $ 81,449                
Depreciation, Depletion and Amortization         $ 0 $ 5,091          
Class of Warrants or Right Outstanding Redemption Value     $ 604,200                
Alpha Capital Anstalt [Member] | Convertible Notes Payable [Member]                      
Debt Instrument, Face Amount                   $ 1,250,000  
Depreciation, Depletion and Amortization         209,722            
Convertible Notes Payable [Member] | Board Member, Marmol [Member]                      
Proceeds from Convertible Debt   $ 250,000                  
Convertible Notes Payable [Member] | Chief Executive Officer [Member]                      
Proceeds from Convertible Debt $ 130,000                    
Convertible Notes Payable [Member]                      
Debt Instrument, Face Amount                     $ 50,000
Debt Instrument, Interest Rate, Stated Percentage       12.00%              
Interest Expense, Related Party       $ 45,000 18,641            
Interest Expense, Debt         $ 1,266            
Contractor [Member]                      
Notes Payable, Related Parties, Current       300,000              
Interest Payable, Current       45,000              
Arowana Note [Member]                      
Debt Instrument, Interest Rate, Stated Percentage                 6.00%    
Proceeds from Convertible Debt       2,278,072            
Convertible Debt       7,900,000         $ 1,600,000    
Debt Instrument, Increase (Decrease), Net       $ 7,800,000              
Arowana Convertible Note [Member]                      
Debt Instrument, Interest Rate, Stated Percentage               12.00%      
Convertible Debt               $ 269,688      
Depreciation, Depletion and Amortization       $ 75,494            
Proceeds from Convertible Debt       $ 50,000            
Notes Payable, Related Parties, Current       $ 300,000            
Interest Payable, Current       $ 191,604     $ 60,892        
XML 46 R33.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 7 - Commissions Payable (Details Textual) - USD ($)
1 Months Ended 3 Months Ended
Jan. 31, 2016
Nov. 30, 2015
Mar. 31, 2016
Dec. 31, 2015
Carlyle Capital Markets, Inc. [Member] | CCMI [Member] | PS IV [Member]        
Payments for Legal Settlements   $ 1,700,000    
Escrow Deposit   $ 2,500,000    
Carlyle Capital Markets, Inc. [Member] | CCMI [Member] | PS V [Member]        
Percentage From Proceeds From Financing Or Disposition Of Project   10.00%    
Commissions Payable       $ 600,000
Vis Solis, Inc. [Member]        
Commissions Payable       900,000
Proceeds from Project     $ 1,600,000  
Vis Solis, Inc. [Member]        
Payments for Legal Settlements $ 900,000      
Commissions Payable     $ 1,540,000 $ 1,540,000
XML 47 R34.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 8 - Mediation Settlement (Details Textual) - USD ($)
1 Months Ended 3 Months Ended
Mar. 03, 2016
Mar. 25, 2015
Mar. 05, 2015
Mar. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
TCH Principal Solar, LP [Member] | Common Stock [Member]              
Equity Investment Held By Third Party, Amount   $ 500,000 $ 500,000        
Proceeds from Issuance or Sale of Equity       $ 2      
TCH Principal Solar, LP [Member] | PS V [Member]              
Percentage From Proceeds From Financing Or Disposition Of Project 10.00%            
Estimated Litigation Liability, Current             $ 800,000
TCH Principal Solar, LP [Member]              
Payments for Legal Settlements $ 300,000            
Proceeds from Issuance or Sale of Equity         $ 1,679,001  
XML 48 R35.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 9 - Leases (Details Textual)
3 Months Ended
Mar. 31, 2015
USD ($)
Powerhouse One LLC [Member]  
Operating Leases, Rent Expense $ 6,645
XML 49 R36.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 9 - Current Solar Array Installations (Details) - SunGen Step Guys [Member]
3 Months Ended
Mar. 31, 2016
Location Alfred, ME
kWh 110
Date Sep 2009
Term 25 yr. + 2 - 25-yr renewals
Rent 0.00%
XML 50 R37.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 10 - Derivative Liability on Warrants (Details Textual) - USD ($)
3 Months Ended
Mar. 02, 2015
Mar. 31, 2016
Mar. 31, 2015
May. 06, 2015
Convertible Debt [Member] | Alpha Capital Anstalt [Member]        
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 234,375      
Class of Warrant or Right Outstanding Contractual Life 5 years 180 days      
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 6     $ 4
Warrant [Member]        
Class of Warrant or Right Outstanding Contractual Life   4 years 109 days    
Class of Warrant or Right, Exercise Price of Warrants or Rights   $ 5.86    
Derivative, Loss on Derivative     $ 336,884  
Derivative, Gain on Derivative     317,669  
Derivative, Gain (Loss) on Derivative, Net     19,215  
Derivative, Gain (Loss) on Derivative, Net   $ 19,215  
XML 51 R38.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 10 - Warrant Input Assumptions (Details) - Warrant [Member]
3 Months Ended
Mar. 31, 2016
USD ($)
Estimated fair value $ 6.77
Expected life (years) 5 years 186 days
Risk free interest rate 1.65%
Volatility 146.11%
XML 52 R39.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 11 - Capital Stock (Details Textual) - USD ($)
1 Months Ended 3 Months Ended
Feb. 28, 2015
Jan. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Preferred Class A [Member]          
Preferred Stock, Shares Authorized         2,000,000
Preferred Stock, Par or Stated Value Per Share         $ 0.01
Restricted Stock [Member] | The 2014 Equity Incentive Plan [Member]          
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period   12,500      
Stock Issued During Period, Value, Restricted Stock Award, Gross   $ 37,500      
The 2014 Equity Incentive Plan [Member]          
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant     794,816    
Common Stock Capital Shares Issued and Reserved for Future Issuance     966,090    
Director [Member]          
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross 6,250        
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price $ 6        
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period 10 years        
Advisor [Member]          
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross 6,000        
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price $ 6        
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period 5 years        
Share-based Compensation Arrangement by Share-based Payment Award, Award Expected, Continued Service Period 2 years        
Consultant [Member]          
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross 6,250        
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price $ 6        
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period 10 years        
Share-based Compensation Arrangement by Share-based Payment Award, Award Expected, Continued Service Period 3 years        
General and Administrative Expense [Member]          
Allocated Share-based Compensation Expense     $ 0 $ 37,500  
Class of Warrant or Right, Outstanding         550,434
Warrant [Member]          
Class of Warrant or Right Outstanding Contractual Life     4 years 109 days    
Class of Warrant or Right, Exercise Price of Warrants or Rights     $ 5.86    
Preferred Stock, Shares Authorized     2,000,000   2,000,000
Preferred Stock, Par or Stated Value Per Share     $ 0.01   $ 0.01
Common Stock, Shares Authorized     15,000,000   15,000,000
Common Stock, Capital Shares Reserved for Future Issuance         966,090
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant         794,816
XML 53 R40.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 11 - Fair Value Assumptions (Details) - Warrant [Member]
12 Months Ended
Dec. 31, 2015
$ / shares
Minimum [Member]  
Expected life (years) 2 years 182 days
Risk free interest rate 0.052%
Volatility 146.00%
Maximum [Member]  
Expected life (years) 5 years
Risk free interest rate 1.58%
Volatility 207.00%
Estimated fair value (in dollars per share) $ 6
XML 54 R41.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 12 - Noncontrolling Interest (Details Textual)
Aug. 31, 2015
The Original Owners of Powerhouse One [Member]  
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners 11.00%
XML 55 R42.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 14 - Taxes (Details Textual)
$ in Millions
3 Months Ended
Mar. 31, 2016
USD ($)
Earliest Tax Year [Member]  
Open Tax Year 2012
Latest Tax Year [Member]  
Open Tax Year 2015
Operating Loss Carryforwards $ 13.3
XML 56 R43.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 15 - Commitments and Contingencies (Details Textual) - USD ($)
3 Months Ended
Jun. 14, 2013
Mar. 31, 2016
Guarantee Obligations [Member]    
Contingent Liabilities   $ 600,000
Steuben Investment Company II, L.P. [Member]    
Stock Issued During Period, Shares, New Issues 727,273  
Stock Issued During Period, Value, New Issues $ 1,600,000  
Sale of Stock, Price Per Share $ 2.20  
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 545,455  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 4  
Class of Warrant or Right Outstanding Contractual Life 10 years  
Expected Penality to Be Paid   $ 216,000
XML 57 R44.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 16 - Subsequent Events (Details Textual) - USD ($)
1 Months Ended
Apr. 14, 2016
Mar. 31, 2016
Subsequent Event [Member] | Director [Member]    
Proceeds from Unsecured Notes Payable $ 200,000  
Origination Fee, Percentage 15.00%  
Guaranteed Return Rate, After-Tax   10.00%
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