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SEC offering circular

Rayton Solar Company Information

 

In this Offering Circular, the term “Rayton Solar” or “the company” refers to Rayton Solar, Inc. Please visit the SEC.gov page for more in-depth information. For Regulation A+ Offering information, visit our Start Engine page.

 

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

 

DILUTION

Dilution means a reduction in value, control or earnings of the shares an investor owns.

Immediate dilution

An early-stage company typically sells its securities to its founders and early employees at very low prices because, in most cases, they provide services to the business but are not paid market wages. Likewise, when a business is seeking financing to begin its operations, the prices at which it may sell its securities to early investors, often family members or friends, are low. (Collectively, we refer to the founders and early private placement investors as the “Primary Investors”.) Later in its development, when the business seeks cash investments from new, unrelated investors, like you, the new investors often pay a higher price for their shares than the price paid by the Primary Investors. This means that the book value per share of the Common Stock you purchase is diluted because the book value of per share of all the shares is the same, but you paid more for your shares than the Primary Investors paid for their shares.

Visit sec.gov to compare the price that investors in this offering will pay for their shares assuming the sale of 25%, 50%, 75% and 100% of the Common Stock we are offering with the effective cash price paid by the Primary Investors.

Future dilution

Another important way of looking at dilution is the dilution that happens due to future actions by the company. The investor’s stake in a company could be diluted due to the company issuing additional shares. In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another crowdfunding round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.

If the company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends, and most early stage companies are unlikely to offer dividends, preferring to invest any earnings into the company).

The type of dilution that hurts early-stage investors most occurs when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):

· In June 2014 Jane invests $20,000 for shares that represent 2% of a company valued at $1 million.

 

· In December the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 1.3% of the company but her stake is worth $200,000.

 

· In June 2015 the company has run into serious problems and in order to stay afloat it raises $1 million at a valuation of only $2 million (the “down round”). Jane now owns only 0.89% of the company and her stake is worth only $26,660.

 

This type of dilution might also happen upon conversion of convertible notes into shares. Typically, the terms of convertible notes issued by early-stage companies provide that in the event of another round of financing, the holders of the convertible notes get to convert their notes into equity at a “discount” to the price paid by the new investors, i.e., they get more shares than the new investors would for the same price. Additionally, convertible notes may have a “price cap” on the conversion price, which effectively acts as a share price ceiling. Either way, the holders of the convertible notes get more shares for their money than new investors. In the event that the financing is a “down round” the holders of the convertible notes will dilute existing equity holders, and even more than the new investors do, because they get more shares for their money. Investors should pay careful attention to the amount of convertible notes that the company has issued (and may issue in the future, and the terms of those notes.

If you are making an investment expecting to own a certain percentage of the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share.

PLAN OF DISTRIBUTION AND SELLING SECURITY HOLDERS

Rayton Solar is offering a maximum of 32,894,736 shares of Common Stock on a “best efforts” basis.

 

Rayton Solar is not selling the shares through commissioned sales agents or underwriters. The company will use its existing website, www.raytonsolar.com, to provide notification of the offering. Persons who desire information will be directed to www.StartEngine.com, a website owned and operated by an unaffiliated third party that provides technology support to issuers engaging in Regulation A Offerings.

 

The company will pay StartEngine for its services in hosting the offering of the shares on its online platform. This compensation consists of: (i) $50 per investor in cash paid when such investor deposits funds into escrow; (ii) a warrant to purchase that number of shares of Common Stock determined by dividing (A) the product of (x) the number of individual investors times and (y) $50 by (B) 30% of $1.52 (the issue price to the investors). Start Engine does not directly solicit or communicate with investors with respect to offerings posted on its site, although it does advertise the existence of its platform, which may include identifying a broad selection of issuers listed on the platform. If each investor were only to invest the minimum subscription amount of $500, the company estimates the maximum fee that could be due to StartEngine for the aforementioned fees would be $5,000,000 if it achieved the maximum offering proceeds. An assumption of $3,000 for the investment amount was used, which corresponds to the current average investment size for reservations during the “test the waters” period, in estimating the fees due in the “Use of Proceeds to Issuer” below.

 

The company’s Offering Circular will be furnished to prospective investors in this offering via download 24 hours a day, 7 days a week on the startengine.com website.

 

The company is offering its securities in all states other than Texas, Florida, Arizona and North Dakota. In the event the company makes arrangements with a broker-dealer to sell into these states, it will file a post-qualification amendment to the Offering Statement of which this Offering Circular forms a part.

 

Investors’ Tender of Funds

 

After the Offering Statement has been qualified by the Securities and Exchange Commission, the company will accept tenders of funds to purchase the shares. The company may close on investments on a “rolling” basis (so not all investors will receive their shares on the same date). The funds tendered by potential investors will be held by Provident Trust Group LLC, the escrow agent, and will be transferred to the company upon closing. A closing will occur each time the company accepts funds (after the first closing, directly from the investors). Upon closing, funds tendered by investors will be made available to the company for its use.

 

Process of Subscribing

 

Prospective investors who submitted non-binding indications of interest during the “test the waters” period, will receive an automated message from StartEngine indicating that the offering is open for investment. You will be required to complete a subscription agreement in order to invest. The subscription agreement can only be completed on www.StartEngine.com. The subscription agreement includes a representation by the investor to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your net worth (excluding your principal residence). The subscription agreement must be delivered to Rayton Solar and you may either mail or wire funds for the subscribed amount in accordance with the instructions stated in the subscription agreement. The subscription agreements will be reviewed for completeness by Provident Trust Group LLC.

 

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The company has agreed to pay FundAmerica LLC, a technology service provider, a license fee of $500 per month and $7.50 per transaction processed. In addition, the company will pay Provident Trust Group LLC (i) $500 for escrow account set up fee, (ii) $25 per month for so long as the Offering is being conducted, but in no event longer than two years ($600 in total fees), (iii) $2 per domestic investor for anti-money laundering check (up to $60 for international investors), (iv) $5.00 per investor (one-time accounting fee upon receipt of funds), (v) a cash management fee of 0.0025% of funds processed and (vi) any applicable fees for fund transfers (ACH $0.50, check $10, wire $15 or $35 for international). FundAmerica Stock Transfer LLC, an affiliate of FundAmerica LLC, will serve as transfer agent to maintain stockholder information on a book-entry basis and will charge $25 per month.This assumption for the investment amount was used in estimating the fees due in the “Use of Proceeds to Issuer” below.

 

Selling Securityholders

 

Securities will be sold for the account of certain selling securityholders. The selling securityholders will sell up to an aggregate amount of 1,973,682 shares of Common Stock. As of the date of this Offering Circular, all of the consideration owed to Rayton Solar for the issuance of the Common Stock held by the selling securityholders has been received.

 

Below is a table of the current beneficial holders of the Common Stock of Rayton Solar. Sales by the selling securityholders will not begin until after the company has received $7,000,000 in gross sales of its Common Stock in this Offering. To provide additional detail on the selling securityholders, the table includes information on sales made at gross sales of $8.5 million and $10 million in this Offering.

 

Please visit the sec.gov site for a table of the current beneficial holders of the Common Stock of Rayton Solar.

USE OF PROCEEDS TO ISSUER

The company estimates that, at a per share price of $1.52, the net proceeds from the sale of the 32,894,736 shares in this offering will be approximately $43,025,026, after deducting the estimated offering expenses of approximately $3,974,974 (including, payment to StartEngine, FundAmerica LLC, marketing, other legal and accounting professional fees and other expenses).

 

The proceeds will be used to repay $150,000 in debt to ReGen America, Inc., 50% of which is owned by Mr. Yakub, incurred for the payment of a co-engineering development fee. See, “Interest of Management and Others in Certain Transactions – ReGen America, Inc. Long-Term Convertible Debt Agreement”.

 

The table at sec.gov shows the net proceeds the company would receive from this offering assuming the sale of 25%, 50%, 75% and 100% of the Common Stock we are offering. There is no guarantee that we will be successful in selling any of the Common Stock we are offering.

THE COMPANY'S BUSINESS

Rayton Solar was incorporated in the State of Delaware on October 17, 2013. The company’s goal is to develop the most cost-efficient source of renewable energy through ion implanted, ultra-thin, float zone silicon photovoltaic modules (“PV Modules”). Photovoltaics (“PV”) is a method of converting solar energy into direct current electricity using semiconducting materials that exhibit the photovoltaic effect.A solar photovoltaic module (solar panel) is composed of individual photovoltaic cells (solar cells). This crystalline-silicon module comprises 60 solar cells and has an aluminum frame and glass on the front. A photovoltaic system employs solar panels composed of a number of solar cells to supply usable solar power.

 

With the use of solar energy increasing after the US economic downturn post-2007, and tax incentives ending in 2016, the company seeks to maximize the opportunity in the solar energy market by commercializing the manufacturing concept described below, which the company believes will be more cost effective and efficient than current manufacturing techniques.

 

Principal Products and Services

 

Rayton Solar intends to use its technology to develop, manufacture, and sell ion implanted, ultra-thin, float zone silicon PV modules to wholesalers, contractors, developers, and consumers of solar energy panels.

 

Technology

 

Solar energy is expensive because of the existing technique used to create PV modules, which creates silicon waste. Currently, companies use a diamond wire cutting process to create these modules. This process uses 50 to 100 times more silicon than is needed for the silicon to be a charge carrier. The waste is created because half of the silicon ingot is sawed into dust during the manufacturing process, and because the process cannot slice the silicon thinner than 150-200 microns. The company believes that its technology, as described below, will create modules more efficiently than the solar industry average with zero silicon waste compared to the industry’s current 40-50% waste of the silicon ingot.

 

Using the particle accelerator co-developed with PNL, Rayton Solar is able to achieve close to zero waste and create cost-efficient PV modules using the following manufacturing technology and process:

 

Step 1: Ion implantation via the particle accelerator. The particle accelerator is currently capable of producing 6MW PV modules a year.

 

Protons are implanted 3 microns deep into the silicon ingot.

 

Step 2: Rapid thermal annealing.

 

The implanted silicon is then annealed to a substrate directly off the ingot.

 

Step 3: Silicon exfoliation.

 

The annealed silicon is separated from the ingot without any waste.

 

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Step 4: Phosphorus diffusion, wiring, laminating, texturing, and testing.

 

The annealed silicon then goes through an assembly line, where phosphorus diffusion is conducted on the cell to create a negative charge, the cell is wired via screen printing, laminated with glass and tested.

 

Engineering and Development to Date

 

 

Rayton Solar has been successful in manufacturing solar cells using the particle accelerator. However, in order to produce solar cells at the rate of 150 per hour, which is the industry standard, the particle accelerator must be modified. The company intends to use the proceeds of this offering to build a robotic system that will allow the particle accelerator to produce solar cells at the industry rate.

 

Furthermore, once the company has finalized its design on its solar panel, it must then go through UL certification in order to be able to sell the panels in the US market. Although Europe, China, India and other countries do not require UL certification, they each have their own certification processes which the company must satisfy before it can sell the panels in those countries.

 

Management

 

Information about the company’s management can be found in “Directors, Executive Officers and Significant Employees”.

 

Market and Competition

 

The solar energy market is a global market whose primary customer base focuses on family homes and commercial developments. The company believes these users place a significant premium on the value of renewable energy and have demonstrated a willingness to pay for energy saving PV modules that also reduce energy costs. With current government subsidies decreasing in 2016 and energy costs rising in the economic market, the potential cost-saving mechanism of more cost-efficient solar energy is the projected future.

 

In this highly competitive industry, Rayton Solar plans to be a competitive wholesaler and sell its product to various retail installers including Solar City, Vivint, Verango, Solar World, and Petersen Dean. However, it does not yet have agreements to sell to such retail installers.

 

PV Module Market and Competition

 

Rayton Solar plans to enter the $24.2 billion renewable energy market with competitors such as First Solar, Yingli Solar, Jinko Solar, SunEdison, and SunPower. Rayton Solar expects its customers not to be individual homeowners, but rather, project developers, electrical contractors, and wholesalers who built and develop large residential and commercial structures and install solar panels.

 

Solar Cells Market and Competition

 

In the event Rayton Solar does not enter into the PV module market it will initiate the sale of solar cells. The solar cell industry has a current market size of $4.1 billion with competitors such as BSEnergy, Risen Energy, Nice Sun PV, Unitech, and WenZhou Solar. The manufactures of PV modules such as the companies discussed above are currently the primary consumers of solar cells.

 

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PV Material/Machinery/Suppliers

 

Rayton Solar will need a particle accelerator, Rapid Thermal Annealing (RTA) machinery which heats up silicon and is the catalyst for the exfoliation process, an assembly line which takes the final PV cell and puts it into a PV module, a Plasma Enhanced Chemical Deposition (PECD) machine, a screen printing machine, and photovoltaic raw material such as silicon ingots and applicable chemicals to manufacture 6MW PV modules. The particle accelerator that the company intends to acquire is provided by PNL and costs $2,300,000 and takes approximately ten months to produce. Rayton Solar will also work with various vendors to obtain RTA machinery, an assembly line, PECD, a screen printing machine, and PV raw material. Upon the acquisition of the particle accelerator and the necessary ancially machinery the Company would engage in six months of rigorous testing before production of any PV cells or PV modules would take place.

 

If Rayton Solar is able to raise up to $35 million in this offering, it will need 8 particle accelerators and exponentially more raw material supplies to manufacture 54MW PV modules.

 

Research and Development

 

Rayton Solar has invested approximately $343,000 in 2016 and $181,265 in 2015 in research and development and in product development. The company’s research and development costs consist primarily of rights to PNL’s base technology and materials for specific testing (as described in the Joint Developments Agreement with Phoenix Nuclear Labs, LLC included as Exhibit 6.1 to the Offering Statement of which this Offering Circular forms a part). Rayton Solar used these expenses to work with PNL to modify the PNL’s base technology and create a particle accelerator that is used in the narrow Rayton process to cut silicon ingots into 3-micron thicknesses.

 

In addition, the company incurred costs to create test cells in the PNL laboratory and conducted thermo-dynamic studies and research for the ion implantation and exfoliation of silicon ingots that are not patented. The company has further conducted studies on nano-texturing for thin-film silicon that could optimize cell efficiency and light trapping.

 

 

The particle accelerator is currently not ready to manufacture solar modules commercially because, in its current form, it cannot produce silicon wafers at the rate of 150 per hour, which is standard for the industry. The company must modify the particle accelerator in order to achieve this capacity. The company anticipates that it will require between $600,000 to $800,000 in personnel costs and equipment to design and test the modifications. These costs are incorporated in the table included in “Use of Proceeds” in the categories labeled “Equipment” and “Salaries and Wages”.

 

PNL is Rayton’s sole producer of particle accelerators, which is the primary piece of equipment used in the company’s manufacturing process. PNL is the only known company to produce the specific type of particle accelerator needed for the manufacturing process. Although other companies may be used to replicate the machinery, it would require a significant amount of both time and money.

 

 

Employees

 

Rayton Solar currently has six full-time at-will employees, Andrew Yakub, Jeff McKay, Davis Darvish, Shawn Hakim, Maysa Mohajer and Ninel Vartanian, and no part-time employees.

 

The company plans to use proceeds from this offering to hire more employees including a Chief Technology Officer and design engineers.

 

Regulation

 

Certification

UL LLC is a global independent safety science company with more than a century of expertise in safety solutions from public adoption of electricity to new breakthroughs in sustainability, renewable energy and nanotechnology. Dedicated to promote safe living and working environments, UL helps safeguard people, products and places.

 

Rayton Solar’s greatest regulatory hurdle is obtaining a UL certification required to sell solar cell modules. UL certifies, validates, tests, verifies, inspects, audits, advises, and educates to help customers navigate growing complexities across the supply chain.

 

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To obtain UL certification, Rayton Solar must go through the following procedure: Rayton Solar will request a quote from UL at UL.com at which time, UL will prepare a quote with requirements used for testing, costs and other relevant information. Rayton Solar will review and accept the quote to begin project planning. Once Rayton Solar accepts the quote, UL will send service agreements (if needed) and deposit information (if required). Then Rayton Solar will accept the service agreements and pay the required deposit at which time the project planning will begin and UL will provide details on all required information and samples needed. Rayton Solar must provide UL with all the required product information and necessary samples. UL will complete the project planning and conduct evaluation once it has received all of the information and samples from Rayton Solar. If, after testing is complete, and the product is in compliance, UL will develop an investigation report based on the test results and issue notice of completion.

 

Even after Rayton Solar shows that it is in compliance, Rayton Solar will need to develop or purchase labels with the UL mark pursuant to UL requirements. Then, UL will carry out an initial production inspection at the manufacturing locations and will continue to do so over the lifetime of UL certification of the product. So long as Rayton Solar is in compliance, it will obtain authorization to use the UL Mark.

 

Environmental Regulations

Once it begins manufacturing its product, the company may use, generate, and discharge toxic, volatile, or otherwise hazardous chemicals and wastes in its research and development, manufacturing, and construction activities. The company will be subject to a variety of federal, state, and local governmental laws and regulations related to the purchase, storage, use, and disposal of hazardous materials. The company expects to be required to obtain environmental permits necessary to conduct its business. Compliance with these laws and regulations may be costly and may have a material adverse effect on our business and results of operations.

 

Intellectual Property

 

The company relies on a combination of patent, trademark, copyright, trade secret, and contractual protections to establish and protect its intellectual proprietary rights.

 

The company’s intellectual property includes U.S. Patent No. 9,404,198 directed to a process and related apparatus for manufacturing silicon wafers from a solid core ingot by way of ion implantation and exfoliation, which issued August 2, 2016 and is set to expire September 27, 2033; and pending U.S. Appl. No. 14/625,544 (U.S. Publication No. 2015/0159298) directed to a process for manufacturing silicon wafers from float zone silicon, which recently received a Notice of Allowance on August 3, 2016 and is expected to issue before the end of 2016.

 

Rayton Solar has a co-engineering agreement with PNL for the development of the ion implantation system of the particle accelerator. Pursuant to the agreement with PNL, PNL owns the intellectual property of the developed particle accelerator. Rayton Solar, however, has the exclusive right to this machine in the solar industry and receives a 3.5% royalty if the machine that was co-developed is sold outside of the solar industry. All other components of the manufacturing process, Rayton’s proprietary end station and modified off the shelf solar cell processing equipment belongs to Rayton Solar.

 

Litigation

 

The company is not involved in any litigation, and its management is not aware of any pending or threatened legal actions relating to its intellectual property, conduct of its business activities, or otherwise.

 

THE COMPANY’S PROPERTY

 

Rayton Solar does not own any real estate or significant assets.

 

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

 

Since our incorporation on October 17, 2013, we have been engaged primarily the development of a proprietary manufacturing technology that produces solar cells for photovoltaic (PV) modules and obtaining loans and funds from investors to fund that development. We are considered to be a development stage company, since the company is devoting substantially all of its efforts to establishing its business and planned principal operations have not commenced.

 

Operating Results

 

Rayton Solar has not yet generated any revenues and it does not expect to do so until after receiving UL certification and manufacturing and selling PV modules or solar cells. Manufacturing and selling these products is dependent upon the funds raised in this offering.

 

Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015

 

Operating expenses for the six months ended June 30, 2016 increased by 187% over the six months ended June 30, 2015, reflecting a significant increase in the company’s activity and efforts to advance research and development. General and Administrative expenses increased by 267% from $199,796 to $732,322, primarily as a result of increased salary expenses and legal expenses. Sales and Marketing costs increased from $79,350 to $335,333 due to the company’s initiation of marketing activities in the second half of fiscal year 2015 and increased marketing activities during the first two quarters of 2016.

 

As a result, Rayton Solar’s net loss for six months ended June 30, 2016 was $1,142,303 as compared to a net loss of $392,544 for the six months ended June 30, 2015, an increase of 191%. The company’s accumulated deficit at June 30, 2016 was $2,122,368.

 

Twelve Months Ended December 31, 2015 Compared to Twelve Months Ended December 31, 2014

 

Operating expenses for the twelve months ended December 31, 2015 increased by 190% over the twelve months ended December 31, 2014, reflecting a significant increase in the company’s activity and efforts to advance research and development. General and Administrative expenses increased by 129% from $189,921 to $434,915, primarily as a result of increased salary expenses and legal expenses. Sales and Marketing costs increased from $3,076 to $110,825 due to the company’s initiation of marketing activities in 2015.

 

As a result, Rayton Solar’s net loss for the twelve months ended December 31, 2015 was $725,762 as compared to a net loss of $251,552 for the twelve months ended December 31, 2014, an increase of 189%. The company’s accumulated deficit at December 31, 2015 was $980,065.

 

In August 2014, Rayton Solar entered into a Joint Developments Agreement with Phoenix Nuclear Labs, LLC (“PNL”) for the development of the company’s ion implantation system technology (the “PNL Agreement”). The first phase of the PNL Agreement calls for Rayton Solar to pay development payments based on outlined tasks defined by the agreement totalling $283,967. The second phase of the agreement is for the production of a prototype accelerator system for which the final price Rayton Solar will be responsible for must be negotiated prior to its production. If and when a final price can be determined between the two parties, the PNL Agreement provides Rayton Solar with a supply agreement of up to five years, and would require the company to purchase at least nine accelerator systems. The PNL Agreement also includes a five year profit sharing of 3.5% of net profits payable to Rayton Solar for certain profits generated by PNL that include the Company’s technology. During the years ended December 31, 2015 and December 31, 2014, Rayton Solar recognized research and development costs of $170,380 and $56,793 related to the first phase of its agreement. As of December 31, 2015, $56,793 was due to PNL and is included in the accounts payable in the balance sheet with the related expense included within research and development in the accompany statement of operations. Such payable was paid subsequent to year end.

 

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Liquidity and Capital Resources

 

As of June 30, 2016, Rayton Solar has cash of $1,103,026 as compared to cash of $364,351 as of December 31, 2015. Included in the current liabilities is a balance of $81,679 compared to $69,990 as of December 31, 2015. Total liabilities as of June 30, 2016 increased to $231,679 due to an increase in accrued liabilities.

 

As of December 31, 2015, Rayton Solar had cash of $364,351 as compared to cash of $3,411 as of December 31, 2014. Included in the current liabilities is a balance of $69,990 compared to $63,521 as of December 31, 2014. Total liabilities as of December 31, 2015 increased to $219,990 due to a $150,000 long-term convertible debt from ReGen America, Inc.

 

In 2015, Rayton Solar funded its co-engineering development fees primarily through a long-term convertible debt agreement with ReGen America, Inc. which its founder and CEO, Andrew Yakub is a 50% owner. The convertible debt in the amount of $150,000 was issued on June 12, 2015, at an interest rate of 3.25% per annum.

 

The long-term convertible debt agreement is more fully described below in “Interest of Management and Others in Certain Transactions” and in Exhibit 6.3 to the Offering Statement of which this Offering Circular forms a part.

 

Interest expense for the years ended December 31, 2015 and 2014 was $2,641 and zero, respectively.

 

Plan of Operations

 

We intend to pursue development of our PV modules and solar cells to enable future sales. These activities range from laboratory research to continued engineering and development.

 

We expect to use the net proceeds received from this offering in our efforts related to research and development, protection of our intellectual property, and exploration of market opportunities, as well as for working capital and other general corporate purposes. The net proceeds from this offering are anticipated to be approximately $43,025,026 (assuming the maximum offering amount is sold) after deducting estimated offering expenses of approximately $3,974,974, which is expected to be sufficient to fund our activities for at least the next 60 months following the offering. Our anticipated costs include employee salaries and benefits, compensation paid to consultants, capital costs for research and other equipment, costs associated with development activities including travel and administration, legal expenses, sales and marketing costs, general and administrative expenses, and other costs associated with an development stage technology company. We anticipate increasing the number of employees by up to approximately 3-7 employees; however, this is highly dependent on the nature of our development efforts. We anticipate adding employees in the areas of research and development, sales and marketing, and general and administrative functions as required to support our efforts. We expect to incur consulting expenses related to technology development and other efforts as well as legal and related expenses to protect our intellectual property. We expect capital expenditures to be between $2.3 million and $4.6 million annually, but these are highly dependent on the nature of the operations and how many particle accelerators are purchased.

 

The amounts that we actually spend for any specific purpose may vary significantly, and will depend on a number of factors including, but not limited to, the pace of progress of our commercialization and development efforts, actual needs with respect to product testing, research and development, market conditions, and changes in or revisions to our marketing strategies, as well as any legal or regulatory changes which may ensue. In addition, we may use a portion of any net proceeds to acquire complementary products, technologies or businesses; however, we do not have plans for any acquisitions at this time. We will have significant discretion in the use of any net proceeds. Investors will be relying on the judgment of our management regarding the application of the proceeds of any sale of our common stock.

 

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There is a current market trend of declining prices in PV solar cells and solar modules.  However, by using the particle accelerator, the “narrow Rayton process” will use 50 to 100 times less silicon than the current industry standard of cutting silicon with a diamond wire.  The company believes that this efficiency will keep manufacturing costs low enough to minimize the effects of this trend. See “Summary – The Company.” However, there is no certainty that government, commercial and retail consumers will continue to enter into the solar market.

 

Research and development of new technologies is, by its nature, unpredictable. Although we will undertake development efforts with commercially reasonable diligence, there can be no assurance that the net proceeds from this offering will be sufficient to enable us to develop our technology to the extent needed to create future sales to sustain operations as contemplated herein. If the net proceeds from this offering are insufficient for this purpose, we will consider other options to continue our path to commercialization, including, but not limited to: additional financing through follow-on stock offerings, debt financing, co-development agreements, curtailment of operations, suspension of operations, sale or licensing of developed intellectual or other property, or other alternatives.

 

If we are unable to raise the net proceeds that we believe are needed to develop our technology and enable future sales, we may be required to scale back our development plans by reducing expenditures for employees, consultants, business development and marketing efforts, and other envisioned expenditures. This could reduce our ability to commercialize our technology or require us to seek further funding earlier, or on less favorable terms, than if we had raised the full amount of the proposed offering. Moreover, even if we raise the net proceeds contemplated by this offering, we will need to raise substantial additional capital in the future to attempt to attain commercialization of our product candidates.

 

If management is unable to implement its proposed business plan or employ alternative financing strategies, it does not presently have any alternative proposals. In that event, investors should anticipate that their investment may be lost and there may be no ability to profit from this investment.

 

We cannot assure you that our development products will be approved or accepted, that we will ever earn revenues sufficient to support our operations or that we will ever be profitable. Furthermore, since we have no committed source of financing, we cannot assure you that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease our operations.

 

The proceeds will be used to repay $150,000 in debt to ReGen America, Inc., 50% of which is owned by Mr. Yakub, incurred for the payment of a co-engineering development fee. See, “Interest of Management and Others in Certain Transactions – ReGen America, Inc. Long-Term Convertible Debt Agreement”.

 

The table at sec.gov shows the net proceeds the company would receive from this offering assuming the sale of 25%, 50%, 75% and 100% of the Common Stock we are offering. There is no guarantee that we will be successful in selling any of the Common Stock we are offering.

SUMMARY

The Offering Circular Summary highlights information contained elsewhere and does not contain all the information that you should consider in making your investment decision. Before investing in the company’s Common Stock, you should carefully read this entire Offering Circular, including the company’s financial statements and related notes. You should consider among other information, the matters described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

The Company

The goal of Rayton Solar is to bridge the gap between particle accelerator technology and solar energy production by creating a silicon processing technique that can produce solar modules that are less expensive, but more efficient, than products currently on the market.

Rayton Solar founder Andrew Yakub had a vision of affordable renewable energy for all. He originally conceived of the idea for Rayton Solar, creating the name from the words “sunray” and “proton”, when he realized how important it would be to reduce costs of solar adoption at a pivotal time in our history. He amassed a team of known expert scientists and serial entrepreneurs to bring his vision to life.

Rayton Solar was incorporated as a Delaware corporation on October 17, 2013 for the purpose of designing a manufacturing technology that would produce solar cells for photovoltaic (PV) modules, popularly known as solar panels, with significantly less waste of silicon than current manufacturing processes. Rayton Solar believes that its innovative technological process has the potential to reduce the cost of manufacturing solar panels by upwards of 60% while making them 25% more efficient.

Rayton Solar has the exclusive solar industry rights for the only particle accelerator capable of penetrating silicon at a 3-micron level. This technology was co-engineered with Phoenix Nuclear Laboratory, referred to in this Offering Circular as PNL, and Rayton Solar believes that it is currently the only way to economically create modules that use less than 10 microns of silicon, allowing the use of float-zone silicon – the highest grade silicon. The particle accelerator fires a beam of protons at a silicon ingot, which creates a weakened boundary along a crystalline plane at a depth proportional to the kinetic energy of the protons. A substrate is attached to the silicon ingot, and a thin layer of silicon, referred to as a wafer, can then be separated from the silicon ingot. This uses 50 to 100 times less silicon than the current industry standard method of cutting silicon with a diamond wire, which wastes half the silicon processed. The company’s silicon processing technique used to slice silicon wafers 3-microns thin from a silicon ingot is referred to in this Offering Circular as the “narrow Rayton process.” The particle accelerator in its present form is not, however, capable of producing silicon wafers in the volume necessary for commercial use. One of the purposes of this offering is to provide Rayton Solar with the funds necessary to modify the particle accelerator so that high volume production of silicon wafers is possible.

Once development of the technology is complete, the company will seek to maximize the opportunity in the solar energy market by commercializing this cost-efficient manufacturing concept. While the company intends to produce and market PV modules, it may also market solar cells for producers of PV modules or license out its right to its technology.

In addition to the above-described unique processing technique, Rayton Solar has patented a silicon processing technique for ion implantation and exfoliation on silicon ingots and has patented an ion implantation using float-zone silicon.

THE OFFERING

The company is offering up to 32,894,736 shares of Common Stock for $1.52 per share, including up to 1,973,682 shares of Common Stock sold by current securityholders. Sales by current securityholders will not begin until the company has sold at least $7,000,000 worth of its Common Stock. See “Plan of Distribution and Selling Securityholders.” The total number of authorized shares of Common Stock is 200,000,000.

 

The net proceeds of this offering will be used primarily to develop and validate the company’s technology, to purchase certain assets to advance its plan to produce and market PV modules and for general corporate purposes.

 

The minimum investment size is $500.

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

For salary and share breakdown, please read the comprehensive offering circular at sec.gov

 

Executive Officers:

 

Andrew Yakub, Chief Executive Officer and Chairman of the Board of Directors.

 

Andrew Yakub is the founder of the company and has served as its Chief Executive Officer and Chairman of the Board of Directors since October 2013. Prior to Rayton Solar, in September 2009 Andrew founded and has since acted as the Chief Executive Officer of ReGen America, Inc. a producer of commercial and residential solar photovoltaic systems. In that position, he was responsible for the development of over 6 megawatts of solar installations. Mr. Yakub has ceased providing services to ReGen America, Inc. and currently devotes all of his time to Rayton Solar.

 

Named to Forbes’ “30 under 30” list in 2016, Mr. Yakub is a two time clean technology entrepreneur with a previous solar startup company. Mr. Yakub’s experience spans from UCLA’s Particle Beam Physics Lab to NASA’s Jet Propulsion Lab and has managed over 6MW of commercial solar projects. He holds a BA in Physics from UC Santa Barbara.

 

Directors:

 

James Rosenzweig, Director

 

Dr. James Rosenzweig has been a Director at Rayton Solar since February 2014. He is a professor of physics at UCLA, a position he has held since 1999, and Chair of UCLA’s Physics and Astronomy Department. Dr. Rosenzweig is a world renowned expert in the physics of intense, ultra-fast charged particle beams and their interactions. He is a frequent lecturer in the US Particle Accelerator School and the author or co-author of over 400 scientific articles, and several topical books in beam and accelerator science. Dr. Rosenzweig is a co-founder of RadiaBeam Technologies, a manufacturer of particle accelerator components, diagnostics and turnkey accelerator systems. Dr. Rosenzweig received his Ph.D. from the University of Wisconsin – Madison in 1988.

 

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Mark Goorsky, Director

 

Mark Goorsky has been a Director at Rayton Solar since February 2014. Dr. Goorsky is a Professor of Materials Science and Engineering at UCLA, where he was chair of the department from 2004-2009. He received his Ph.D. in Materials Science and Engineering in 1989 from the Massachusetts Institute of Technology, and his B.S. in Materials Science and Engineering in 1984 from Northwestern University. Dr. Goorsky held a post-doctoral position at the IBM Thomas J. Watson Research Center (Jan. 1989 – June 1991) and started at UCLA in 1991. Dr. Goorsky’s research focuses on materials integration and the relationship between materials defects and device performance in semiconductor structures. He is an expert in ion implantation, layer transfer and wafer bonding in addition to material integration for silicon-based implantation.

 

Significant Employees

 

Rayton Solar has engaged a team of experienced and world-renowned physicists and material science experts, distinguished entrepreneurs and managerial staff to further the business operations of the company, however, the company currently has no significant employees.

 

At the completion of this Offering, the company plans to hire two new employees: (1) a Chief Technology Officer to manage the engineering team and design the future machinery and implement a plan to build out and operation a pilot test line; and (2) a third Design Engineer.

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

ReGen America, Inc. Long-Term Convertible Debt Agreement

 

During the year ended December 31, 2015, Rayton Solar entered into a convertible debt agreement with ReGen America, Inc. for $150,000. Andrew Yakub, CEO of Rayton Solar, is a 50% owner of ReGen America, Inc. The note bears interest of 3.25% with a 6% default rate. The note is due in one lump sum on June 12, 2020 and accordingly, has been classified as a long term liabilities.

 

The note is convertible at the earliest of the following events: (1) the consumption of an investment by an institutional investor or corporate-strategic investor through a single transaction or related series of transaction in aggregate of over $500,000; (2) change in ownership of over 50%; and (3) the date that is five years subsequent to the notes effective date. The conversion price is equal to $20,000,000 divided by the aggregate number of shares of the company’s Common Stock on the date of conversion.

 

Rayton Solar plans to pay the debt of $150,000 at the completion of this Offering. See “Use of Proceeds To Issuer.

 

Executive Officers:

 

Andrew Yakub, Chief Executive Officer and Chairman of the Board of Directors.

 

Andrew Yakub is the founder of the company and has served as its Chief Executive Officer and Chairman of the Board of Directors since October 2013. Prior to Rayton Solar, in September 2009 Andrew founded and has since acted as the Chief Executive Officer of ReGen America, Inc. a producer of commercial and residential solar photovoltaic systems. In that position, he was responsible for the development of over 6 megawatts of solar installations. Mr. Yakub has ceased providing services to ReGen America, Inc. and currently devotes all of his time to Rayton Solar.

 

Named to Forbes’ “30 under 30” list in 2016, Mr. Yakub is a two time clean technology entrepreneur with a previous solar startup company. Mr. Yakub’s experience spans from UCLA’s Particle Beam Physics Lab to NASA’s Jet Propulsion Lab and has managed over 6MW of commercial solar projects. He holds a BA in Physics from UC Santa Barbara.

 

Directors:

 

James Rosenzweig, Director

 

Dr. James Rosenzweig has been a Director at Rayton Solar since February 2014. He is a professor of physics at UCLA, a position he has held since 1999, and Chair of UCLA’s Physics and Astronomy Department. Dr. Rosenzweig is a world renowned expert in the physics of intense, ultra-fast charged particle beams and their interactions. He is a frequent lecturer in the US Particle Accelerator School and the author or co-author of over 400 scientific articles, and several topical books in beam and accelerator science. Dr. Rosenzweig is a co-founder of RadiaBeam Technologies, a manufacturer of particle accelerator components, diagnostics and turnkey accelerator systems. Dr. Rosenzweig received his Ph.D. from the University of Wisconsin – Madison in 1988.

 

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Mark Goorsky, Director

 

Mark Goorsky has been a Director at Rayton Solar since February 2014. Dr. Goorsky is a Professor of Materials Science and Engineering at UCLA, where he was chair of the department from 2004-2009. He received his Ph.D. in Materials Science and Engineering in 1989 from the Massachusetts Institute of Technology, and his B.S. in Materials Science and Engineering in 1984 from Northwestern University. Dr. Goorsky held a post-doctoral position at the IBM Thomas J. Watson Research Center (Jan. 1989 – June 1991) and started at UCLA in 1991. Dr. Goorsky’s research focuses on materials integration and the relationship between materials defects and device performance in semiconductor structures. He is an expert in ion implantation, layer transfer and wafer bonding in addition to material integration for silicon-based implantation.

 

Significant Employees

 

Rayton Solar has engaged a team of experienced and world-renowned physicists and material science experts, distinguished entrepreneurs and managerial staff to further the business operations of the company, however, the company currently has no significant employees.

 

At the completion of this Offering, the company plans to hire two new employees: (1) a Chief Technology Officer to manage the engineering team and design the future machinery and implement a plan to build out and operation a pilot test line; and (2) a third Design Engineer.

SECURITIES BEING OFFERED

We are offering Common Stock to investors in this offering.

 

Our authorized capital stock consists of 200,000,000 shares of Common Stock, $0.0001 par value per share. 15,000,000 shares of Common Stock are currently reserved under the company’s 2014 Equity Incentive Plan, of which 11,785,000 shares are granted, however, as of the date of this Offering Circular, no options have been exercised. As of August 30, 2016, the company had 137,419,968 shares of Common Stock outstanding.

 

The holders of our Common Stock are entitled to one vote per share. In addition, the holders of our Common Stock will be entitled to receive pro rata dividends, if any, declared by our board of directors out of legally available funds. Upon liquidation, dissolution or winding-up, the holders of our Common Stock are entitled to share ratably in all assets that are legally available for distribution. The holders of our Common Stock have no preemptive, subscription, redemption or conversion rights.

 

ReGen America, Inc. Long-Term Convertible Debt Agreement

 

During the year ended December 31, 2015, Rayton Solar entered into a convertible debt agreement with ReGen America, Inc. for $150,000. Andrew Yakub, CEO of Rayton Solar, is a 50% owner of ReGen America, Inc. The note bears interest of 3.25% with a 6% default rate. The note is due in one lump sum on June 12, 2020 and accordingly, has been classified as a long term liabilities.

 

The note is convertible at the earliest of the following events: (1) the consumption of an investment by an institutional investor or corporate-strategic investor through a single transaction or related series of transaction in aggregate of over $500,000; (2) change in ownership of over 50%; and (3) the date that is five years subsequent to the notes effective date. The conversion price is equal to $20,000,000 divided by the aggregate number of shares of the company’s Common Stock on the date of conversion.

 

Rayton Solar plans to pay the debt of $150,000 at the completion of this Offering. See “Use of Proceeds To Issuer.

 

Executive Officers:

 

Andrew Yakub, Chief Executive Officer and Chairman of the Board of Directors.

 

Andrew Yakub is the founder of the company and has served as its Chief Executive Officer and Chairman of the Board of Directors since October 2013. Prior to Rayton Solar, in September 2009 Andrew founded and has since acted as the Chief Executive Officer of ReGen America, Inc. a producer of commercial and residential solar photovoltaic systems. In that position, he was responsible for the development of over 6 megawatts of solar installations. Mr. Yakub has ceased providing services to ReGen America, Inc. and currently devotes all of his time to Rayton Solar.

 

Named to Forbes’ “30 under 30” list in 2016, Mr. Yakub is a two time clean technology entrepreneur with a previous solar startup company. Mr. Yakub’s experience spans from UCLA’s Particle Beam Physics Lab to NASA’s Jet Propulsion Lab and has managed over 6MW of commercial solar projects. He holds a BA in Physics from UC Santa Barbara.

 

Directors:

 

James Rosenzweig, Director

 

Dr. James Rosenzweig has been a Director at Rayton Solar since February 2014. He is a professor of physics at UCLA, a position he has held since 1999, and Chair of UCLA’s Physics and Astronomy Department. Dr. Rosenzweig is a world renowned expert in the physics of intense, ultra-fast charged particle beams and their interactions. He is a frequent lecturer in the US Particle Accelerator School and the author or co-author of over 400 scientific articles, and several topical books in beam and accelerator science. Dr. Rosenzweig is a co-founder of RadiaBeam Technologies, a manufacturer of particle accelerator components, diagnostics and turnkey accelerator systems. Dr. Rosenzweig received his Ph.D. from the University of Wisconsin – Madison in 1988.

 

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Mark Goorsky, Director

 

Mark Goorsky has been a Director at Rayton Solar since February 2014. Dr. Goorsky is a Professor of Materials Science and Engineering at UCLA, where he was chair of the department from 2004-2009. He received his Ph.D. in Materials Science and Engineering in 1989 from the Massachusetts Institute of Technology, and his B.S. in Materials Science and Engineering in 1984 from Northwestern University. Dr. Goorsky held a post-doctoral position at the IBM Thomas J. Watson Research Center (Jan. 1989 – June 1991) and started at UCLA in 1991. Dr. Goorsky’s research focuses on materials integration and the relationship between materials defects and device performance in semiconductor structures. He is an expert in ion implantation, layer transfer and wafer bonding in addition to material integration for silicon-based implantation.

 

Significant Employees

 

Rayton Solar has engaged a team of experienced and world-renowned physicists and material science experts, distinguished entrepreneurs and managerial staff to further the business operations of the company, however, the company currently has no significant employees.

 

At the completion of this Offering, the company plans to hire two new employees: (1) a Chief Technology Officer to manage the engineering team and design the future machinery and implement a plan to build out and operation a pilot test line; and (2) a third Design Engineer.

RISK FACTORS

Investing in Rayton Solar’s shares involves risk. In evaluating the company and an investment in the shares, careful consideration should be given to the following risk factors, in addition to the other information included in this Offering Circular. Each of these risk factors could materially adversely affect Rayton Solar’s business, operating results or financial condition, as well as adversely affect the value of an investment in the company’s shares. The following is a summary of the most significant factors that make this offering speculative or substantially risky. The company is still subject to all the same risks that all companies in its industry, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as cyber-security). Additionally, early-stage companies are inherently more risky than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.

 

The company has realized significant operating losses to date and expects to incur losses in the future.

 

The company has operated at a loss since inception, and these losses are likely to continue. Rayton Solar’s net loss for 2015 was $725,762. Until the company achieves profitability, it will have to seek other sources of capital in order to continue operations.

 

The company’s auditor has issued a “going concern” opinion.

 

The company’s auditor has issued a “going concern” opinion on its financial statements, which means that the auditor is not sure if the company will be able to succeed as a business without additional financing.

 

To date, the company has not generated revenues from its principal operations and has sustained losses since inception. Because losses will continue until such time that the company can procure equipment and complete development of its manufacturing technology and because the company has no committed source of financing, the company relies on financing to support its operations. These factors, among others, raise substantial doubt about the ability of the company to continue as a going concern within one year after the date that the financial statements are issued.

 

Throughout 2016, the company intends to fund its operations through the sale of its securities to third parties and related parties. If the company cannot raise additional capital, it may consume all the cash reserved for operations. There are no assurances that management will be able to raise capital on terms acceptable to the company. If the company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned operations, which could harm the business, financial condition and operating results. The financial statements do not include any adjustments that might result from these uncertainties.

  

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If the company cannot raise sufficient funds it will not succeed or will require significant additional capital infusions.

 

Rayton Solar is offering Common Stock in the amount of up to $50 million in this offering, but may sell much less. After $7 million is raised, the following $3 million will go to the selling securityholders. Even if the maximum amount is raised, the company is likely to need additional funds in the future in order to grow, and if it cannot raise those funds for whatever reason, including reasons outside the company’s control, such as another significant downturn in the economy, it may not survive. If the company does not sell all of the Common Stock it is offering, it will have to find other sources of funding in order to develop its business.

 

Even if Rayton Solar is successful in selling all of the Common Stock being offered, Rayton Solar’s proposed business will require significant additional capital infusions. Based on its current estimates, Rayton Solar will require at least $35 million to create a 54 megawatt, commonly abbreviated as MW, PV module manufacturing facility. This amount does not include the amount needed to manufacture the PV modules for sale. If planned operating levels are changed, higher operating costs encountered, lower sales revenue received or more time is needed to implement the business plan, more funds than currently anticipated may be required. Furthermore, in order to expand, the company is likely to raise funds again in the future, either by offerings of securities or through borrowing from banks or other sources. The terms of future capital infusions may include covenants that give creditors rights over the financial resources of the company or sales of equity securities that will dilute the holders of the company’s Common Stock.

 

The company has not yet generated any revenues.

 

Rayton Solar has no revenues generated since its inception. There is no assurance that the company will ever be profitable or generate sufficient revenue to pay dividends to the holders of its Common Stock. The company does not believe it will be able to generate revenues without successfully achieving target market sales for the PV module to large scale project developers, large scale retailers and wholesalers, or contractors. If the company cannot raise enough funds in this financing to manufacture and sell PV modules, it will need to successfully sell its solar cells to PV module manufacturers, which will result in less revenue to the company. If that fails, then it will need to license its current and future patents, assuming the company is granted its patents that are currently pending. Rayton Solar is dependent upon the proceeds of this offering for working capital, including for the manufacture of the PV modules.

 

The company is an early stage company.

 

As an early stage company and a company developing a new technology, Rayton Solar may encounter difficulties such as unanticipated problems relating to the development and testing of its product, initial and continuing regulatory compliance, vendor manufacturing costs, production and assembly of its product, and the competitive and regulatory environments in which the company intends to operate. It is uncertain, at this stage of its development, if the company will be able to effectively resolve any such problems, should they occur. If the company cannot resolve an unanticipated problem, it may be forced to modify or abandon its business plan.

 

Operations could be adversely affected by interruptions of production that are beyond the company’s control.

 

The company plans to manufacture its own PV modules. However, if it does not raise enough money, it will sell solar cells needed to produce the PV modules, or license the technology instead. Even if it sells solar cells, the company will rely on vendors to provide silicon ingots and other material. If there are interruptions in the ability of a vendor to provide the necessary amounts of silicon ingots, the company will not be able to meet its production.

 

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If the Joint Development Agreement with Phoenix Nuclear Labs, LLC (“PNL”) is terminated, or if PNL is unable to provide the particle accelerator that is necessary for the silicon penetration, the company’s operations could be adversely affected by interruptions of production. Without the particle accelerator provided by PNL, the company will be unable to produce its product.

 

The company is dependent on Phoenix Nuclear Labs, LLC for use of the particle accelerator.

 

The company has a Joint Development Agreement with PNL, for the development of the ion implantation system of the particle accelerator. Although all of the company’s base developments are owned by the company, any technology development through the co-engineering agreement will be owned by PNL who may license the developed technology to third parties. The company relies solely on PNL to provide the particle accelerator and the technology necessary to advance its business.

 

If the Joint Development Agreement with PNL is terminated, or if PNL is unable to provide the particle accelerator, the company will be unable to produce its product. Although the company may find alternative means to access an identical particle accelerator, the licensing or purchasing costs may have a material adverse effect on the financial status of the company and delay production of the PV modules and solar cells.

 

Even if the agreement with PNL is not terminated for any reason, the agreement allows PNL to sell the technology to third parties outside the solar industry in exchange for royalty payments that will be made to the company. Allowing others to use the technology could give competitors the chance to produce a product similar or identical to the company’s product.

 

Developing new products and technologies entails significant risks and uncertainties.

 

Rayton Solar is currently in the research and development stage and has not yet manufactured or created a PV module manufacturing facility. Delays or cost overruns in the development of the 6MW or 54MW PV module manufacturing facility and failure of the product to meet its performance estimates may be caused by unanticipated technological hurdles, difficulties in scaling up manufacturing to meet demand, changes to design or failure on the part of the company’s suppliers to deliver components as agreed. Any of these events could materially and adversely affect our operating performance and results of operations.

 

The company has not yet obtained UL certification.

 

UL certification is an industry standard that assures customers that the company brings safe products and services to the marketplace. Rayton Solar is currently not certified. Although Rayton Solar can sell solar cells to a module manufacturer without the UL certification, the UL certification is required for Rayton Solar to sell solar modules in North America. UL certification is not required to sell solar cell modules abroad, however, other certification will be required if the company plans to sell overseas. Although the company plans to test its product before placing it in the marketplace, there is no guarantee the company will receive UL certification or the certification required by any other country.

 

State regulation may affect the company’s business.

 

New state regulations could effect whether or not customers want to buy solar panels. Regulators may want to change the law around net metering, which is a billing mechanism that credits solar energy system owners for the energy they add to the grid. If new billing mechanisms are implemented and new service charges are added, making the maintenance of solar energy more expensive, the market for solar panels may change dramatically and the company may not have a market in which to sell its product.

 

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Federal regulation may affect the company’s business and may make solar power less desirable.

 

Potential federal regulations may encourage and fund small businesses to engage in federal research and development that has potential for commercialization may make solar power less desirable. For example, the Small Business Innovation Research (SBIR) program, along with other federally funded programs, aim to provide cost-efficient energy and technology to low-income homes through federal investment and research. Federal involvement and programs may trump the cost-efficiency and technology that Rayton Solar plans to provide to potential customers.

 

Projected financial data is included in this Offering Circular; projections are frequently inaccurate.

 

Projected financial data is included in “Management’s Discussion and Analysis.” Those projected results will only be achieved if the assumptions they are based on are correct. There are many reasons why the assumptions could be inaccurate, including customer acceptance of the company’s products, competition, general economic conditions and Rayton Solar’s own inability to execute its plans. Potential investors should take the assumptions into consideration when reading those projections, and consider whether they think the assumptions are reasonable.

 

A majority of the company’s Common Stock is owned by the Chief Executive Officer, whose interests may differ from those of the other stockholders.

 

As of the date of this Offering Circular, Andrew Yakub owns approximately 53.95% of the shares of the company’s issued and outstanding Common Stock and, assuming all of the shares of Common Stock being offered are sold, he will own approximately 44.20% of the shares of the company’s issued and outstanding Common Stock. Therefore, Mr. Yakub will be able to control the management and affairs of the company and most matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control, which may not be in the best interest of the company’s other stockholders.

 

The company depends on key personnel.

 

Rayton Solar’s future success depends on the efforts of key personnel, especially its founder, Andrew Yakub. The loss of services of any key personnel may have an adverse affect on Rayton Solar. There can be no assurance that Rayton Solar will be successful in attracting and retaining the personnel it requires to develop and market the proposed PV module and conduct its proposed operations.

 

The company will require intellectual property protection and may be subject to the intellectual property claims of others.

 

Although the company has obtained a patent to protect the ion implantation using electronic grade silicon obtained by vertical zone melting, or “Float Zone silicon,” the issuance of patents is up to the US Patent and Trademark Office (“USPTO”). There is no guarantee that the company will be granted one or more of the patents for which it has applied or will apply in the future. If one or more of such patents are issued and if a third party challenges the validity of the Rayton Solar patents or makes a claim of infringement against the company, the federal courts would determine whether the company is entitled to patent protection. If Rayton Solar fails to successfully enforce its proprietary technology or otherwise maintain the proprietary nature of its intellectual property used in the PV module production, its competitive position could suffer. Notwithstanding Rayton Solar’s efforts to protect its intellectual property, its competitors may independently develop similar or alternative technologies or products that are equal to or superior to Raytons Solar’s solar photovoltic manufacturing technology without infringing on any of the company’s intellectual property rights or design around their proprietary technologies. There is no guarantee that the USPTO will issue one or more additional patents to Rayton Solar or that any court will rule in Rayton Solar’s favour in the event of a dispute related to Rayton Solar’s intellectual property. In the absence of patent protection, it may be more difficult for Rayton Solar to achieve commercial production of the PV modules.

 

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If we are unable to protect our intellectual property rights or if our intellectual property rights are inadequate for our technology and products, our competitive position could be harmed.

 

Our commercial success will depend in large part on our ability to obtain and maintain patent and other intellectual property protection in the U.S. and other countries with respect to our proprietary technology and products. We rely on trade secret, patent, copyright and trademark laws, and confidentiality and other agreements with employees and third parties, all of which offer only limited protection. We will seek to protect our proprietary position by filing and prosecuting patent applications in the United States and abroad related to our novel technologies and products that are important to our business and, to the extent permitted by local law, also record our copyrights and trademarks and take such additional reasonable steps as are available to otherwise protect our trade secrets and other intellectual property.

 

The steps we have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our proprietary information or infringement of our intellectual property rights, both inside and outside the United States. If we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection obtained is not sufficient, our competitors could develop and commercialize technology and products similar or superior to ours, and our ability to successfully commercialize our technology and products may be adversely affected. It is also possible that we will fail to identify patentable aspects of inventions made in the course of our development and commercialization activities until it is too late to obtain patent protection on them.

 

Because the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, issued patents may be challenged in the courts or patent offices in the U.S. and abroad. Such challenges may result in the loss of patent protection, the narrowing of claims in such patents or the invalidity or unenforceability of such patents, which could limit the ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection for technology and products. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing. Therefore, if we file one or more patent applications to protect our technology, we cannot be certain that we will be the first to make the technology claimed in the pending patent applications, or that we will be the first to file for patent protection of such technology.

 

Protecting against the unauthorized use of patented technology, trademarks and other intellectual property rights is expensive, difficult and may in some cases not be possible. In some cases, it may also be difficult or impossible to detect third-party infringement or misappropriation of our intellectual property rights, even in relation to issued patent claims or recorded copyrights or trademarks, and proving any such infringement may be even more costly and difficult.

 

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and patent protection could be reduced or eliminated for non-compliance with these requirements.

 

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The United States Patent and Trademark Office, or U.S. PTO, and various foreign national or international patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. Periodic maintenance fees on any issued patent are due to be paid to the U.S. PTO and various foreign national or international patent agencies in several stages over the lifetime of the patent. While an inadvertent lapse can, in many cases, be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance may result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to timely file national and regional stage patent applications based on our international patent application, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we apply for patents but fail to maintain the patent applications or any issued patents covering our products, our competitors might be able to enter the market, which would have a material adverse effect on our business.

 

We may become subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

 

Our commercial success depends upon our ability to develop, manufacture, market and sell our products, and to use our related proprietary technologies without violating the intellectual property rights of others. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products, including interference or derivation proceedings before the U.S. PTO. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue commercializing our products. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Under certain circumstances, we could be forced, including by court order, to cease commercializing the applicable product candidate. In addition, in any such proceeding or litigation, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our products or force us to cease some of our business operations, which could materially harm our business. Any claims by third parties that we have misappropriated their trade secrets could have a similar negative impact on our business.

 

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful, and have a material adverse effect on the success of our business.

 

Competitors may infringe patents we may acquire or misappropriate or otherwise violate our intellectual property rights, including our trade secrets, even if done inadvertently. To counter infringement or unauthorized use or disclosure, litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. Also, third parties may initiate legal proceedings against us to challenge the validity or scope of intellectual property rights we own. These proceedings can be expensive and time consuming. Many of our current and potential competitors have the ability to dedicate substantially greater resources to defend their intellectual property rights than we can. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Litigation could result in substantial costs and diversion of management resources, which could harm our business and financial results. In addition, in an infringement proceeding, a court may decide that a patent owned by us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that the patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more patents at risk of being invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the value of your investment.

 

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If we are not able to adequately prevent disclosure of trade secrets and other proprietary information, the value of our technology and products could be significantly diminished.

 

We rely on trade secrets to protect our proprietary technologies to the fullest extent possible. However, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our current and former employees, consultants, outside scientific collaborators, sponsored researchers, contract manufacturers, vendors and other advisors to protect our trade secrets and other proprietary information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, we cannot guarantee that we have executed these agreements with each party that may have or has had access to our trade secrets. Any party with whom we executed such an agreement may breach that agreement and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate or timely remedies for such breaches.

 

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or completely unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they disclose such trade secrets, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third-party, our competitive position would be harmed.

 

We may not be able to protect our intellectual property rights throughout the world.

 

Filing, prosecuting and defending patents on all of our products throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may be able to export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

 

Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents or other intellectual property protection, particularly those relating to pharmaceuticals, which could make it difficult for us to stop the infringement of any patents we obtain or the marketing of competing products in violation of our proprietary rights generally. As a result, proceedings to enforce our patent rights in certain foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business, and could be unsuccessful.

 

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Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

 

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:

 

· others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

 

· our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

 

· we may not develop additional proprietary technologies that are patentable; and

 

· the patents of others may have an adverse effect on our business.

 

The company will face significant market competition.

 

Rayton Solar will initially be a small producer of solar cells for PV modules in a market that has many large producers and will compete against companies with large marketing budgets and established distribution channels. Rayton Solar’s particle accelerator process potentially competes with a number of accelerator technologies in the United States and abroad. Further, Rayton Solar could face competition from competitors of whom Rayton Solar is not aware that have developed or are developing technologies that will offer alternatives to the particle accelerator. Competitors could develop a particle accelerator that renders Rayton Solar’s technology less competitive than Rayton Solar believes it will become. Many existing potential competitors are well-established, have or may have longer-standing relationships with customers and potential business partners, have or may have greater name recognition, and have or may have access to significantly greater financial, technical and marketing resources. Although Rayton Solar is unaware of any other company that has created a particle accelerator that can penetrate silicon at a 3-micron level, it is possible that another solar company is doing so in secret. At this time Rayton Solar does not represent a significant competitive presence in the solar cells market.

 

There is no current market for the company’s shares

 

There is no established public trading market for the resale of Rayton Solar’s Common Stock. However, the company does not have plans to apply for or otherwise seek trading or quotation of the company’s Common Stock on an over-the-counter market. Investors should assume that they may not be able to liquidate their investment for some time, or be able to pledge their shares of Common Stock as collateral.

 

The company has realized significant operating losses to date and expects to incur losses in the future.

 

The company has operated at a loss since inception, and these losses are likely to continue. Rayton Solar’s net loss for 2015 was $725,762. Until the company achieves profitability, it will have to seek other sources of capital in order to continue operations.

 

The company’s auditor has issued a “going concern” opinion.

 

The company’s auditor has issued a “going concern” opinion on its financial statements, which means that the auditor is not sure if the company will be able to succeed as a business without additional financing.

 

To date, the company has not generated revenues from its principal operations and has sustained losses since inception. Because losses will continue until such time that the company can procure equipment and complete development of its manufacturing technology and because the company has no committed source of financing, the company relies on financing to support its operations. These factors, among others, raise substantial doubt about the ability of the company to continue as a going concern within one year after the date that the financial statements are issued.

 

Throughout 2016, the company intends to fund its operations through the sale of its securities to third parties and related parties. If the company cannot raise additional capital, it may consume all the cash reserved for operations. There are no assurances that management will be able to raise capital on terms acceptable to the company. If the company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned operations, which could harm the business, financial condition and operating results. The financial statements do not include any adjustments that might result from these uncertainties.