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SLTN.OB > SEC Filings for SLTN.OB > Form 8-K on 17-Jul-2006All Recent SEC Filings

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Form 8-K for SOLAR THIN FILMS, INC.


17-Jul-2006

Change in Directors or Principal Officers, Change in Shell Company Status,


Item 5.02 Departure of Directors or
Principal Officers; Election of Directors; Appointment of
Principal
Officers



Item 5.06 Change in Shell Company Status

DESCRIPTION OF BUSINESS

History

On August 9, 2005, Solar Thin Films, Inc. (f/k/a American United Global, Inc.) (the "Company") entered into a Share Purchase Agreement (the "Agreement") with Kraft Rt., a Hungarian corporation ("Kraft") and the shareholders of Kraft Rt. Pursuant to the Agreement, the Company agreed to acquire 100% of the outstanding interest in Kraft. On January 30, 2006, the Agreement expired pursuant to its own terms.

Commencing in March 2006 through June 2006, the Company entered into Securities Purchase Agreements with shareholders of Kraft that together owned 95.5% of the equity interest in Kraft to acquire their interests. On June 14, 2006, the Company closed on the acquisition of 95.5% of the outstanding securities of Kraft and, as a result, Kraft is now a majority-owned subsidiary of the Company.

In consideration for the shares of Kraft, the Company issued the sellers an aggregate of 95,500 shares of Series B-4 Preferred Stock of the Company (the "Preferred Shares"). The Preferred Shares are each automatically convertible into 350 shares of common stock or an aggregate of 33,425,000 shares of common stock upon the Company increasing its authorized shares of common stock and, prior to such conversion, the Preferred Shares will have the same voting rights of the shares of common stock and vote together with the shares of common stock on all matters.

In July 2006, the Company changed its name from American United Global Inc. to Solar Thin Films, Inc.

Kraft Organizational History

Kraft History

Kraft was founded in 1993, shortly after the breakup of the communist economy in Hungary. Its founding members were associated with the Hungarian Central Research Institute for Physics. Shortly after Kraft commenced operations, it became a distributor for Edwards Vacuum, the major British manufacturer of vacuum pumps and components. Kraft is presently engaged in the design, development and construction on behalf of its customers of turnkey manufacturing plants that produce photovoltaic thin film modules for sale. We expect the primary use of such photovoltaic thin film modules is to be used by corporations and governments in the development and construction of solar power plants. Kraft, in the future, may further integrate itself in this industry through the engagement in other areas including, but not limited to, operating the manufacturing plants, selling thin film photovoltaic modules, installing the thin film photovoltaic modules and managing solar power plants.

In 1996, Kraft received a purchase order to develop thin film deposition facilities that produce amorphous silicon based thin film photovoltaics. In the subsequent years, Kraft has manufactured and installed four such facilities in Princeton, New Jersey, Budapest, Hungary, China and Greece. The facility in Greece is expected to be completed this year. In producing these facilities, Kraft developed all aspects needed for it to become a leading manufacturer of plants and equipment that produce photovoltaics modules that utilize thin film technology. Photovoltaics ("PV") is the science of capturing and converting sun light into electricity.

Kraft Overview

Kraft is headquartered in Budapest, Hungary and has historically been engaged in the design, development and manufacturing of vacuum based production and quality control equipment used in several hi-tech industries. Over its 10 year existence, Kraft has developed and manufactured a line of equipment serving the semiconductor industry, glass coating technologies and, more recently, the photovoltaic industry. Kraft is presently focusing substantially all of its efforts on the design, development and construction of turnkey manufacturing plants that produce photovoltaic thin film modules for sale and expects most of its near term growth to develop through the manufacturing of its turnkey facilities.


Kraft is pursuing strategic relationships with companies involved in the PV industry in order to further develop manufacturing process technologies for the PV industries. Kraft, through its association with TerraSolar Global, Inc. ("TerraSolar"), a Delaware corporation, is seeking to secure a leading position as the primary supplier of turnkey facilities to manufacture thin film based photovoltaic modules. Such turnkey facility consists of all the hardware and machinery manufactured, assembled, and installed by Kraft and all the software, know-how and training associated with the manufacturing process supplied by TerraSolar. Historically, TerraSolar has served as the main contractor guaranteeing process performance to the buyer, and Kraft is the equipment supplier through TerraSolar to the buyer. Kraft also has a right to market and sell such turnkey facilities. TerraSolar, Inc. ("TSI") owns approximately 49% of the outstanding securities of TerraSolar. Zoltan Kiss, a director and shareholder of the Company owns approximately 35% of TSI. In addition, Kraft is presently negotiating a research and development agreement with Renewable Energy Solutions, Inc. ("RESI") pursuant to which RESI will develop the next generation automated turnkey facility. Zoltan Kiss, a director and shareholder of the Company, is the majority owner of RESI.

Kraft Product Development

PV Modules on Glass Substrate

Kraft has developed manufacturing equipment used in its turnkey manufacturing facilities that produce thin-film based modules on a glass substrates. By 2006, Kraft constructed three turnkey manufacturing facilities, and is currently in the process of completing a fourth facility, to manufacture amorphous silicon based photovoltaic modules. The PV industry and other industries using thin-film technology are changing very rapidly, and it is imperative that Kraft carry on R&D activities to develop the next generation deposition equipment. To accomplish this, there is an ongoing R&D activity together with Kraft's strategic partners, Terrasolar and RESI, to develop:

manufacturing equipment to manufacture copper indium gallium diselenide (CIGS) based PV modules on a 2ft x 4ft glass substrate;

manufacturing technology for thin-film based PV modules that will be able to use substrate size 4ft x 8ft; and

automated glass handling and robotic processes to eliminate labor costs from PV module production.

Thin-Film Photovoltaic on Flexible Substrates

While a large part of the PV industry that generates electricity for cost-efficient electric power applications will continue to use the glass-to-glass thin film PV modules, there is still an appreciable part of the market where thin film photovoltaics on a flexible substrate will be the technology of choice. These markets include:

portable instrumentation chargers because of lighter weight and easy form factors;

applications where the non-breakable part of a metal substrate is an advantage, for example, battery chargers on boats;

in transportation, as the skin of automobiles; and

in space applications and as photovoltaic powered aircraft, where both the lower weight and flexibility are important factors

Generally, the manufacturing equipment to deposit thin films on flexible substrates would use roll to roll coaters. In the case of polymeric organic substrates, special attention has to be made to limit the use of high temperatures to temperatures that are limited by the characteristics of organic materials. The main challenge with the flexible metallic substrate is how to build up voltage of serially interconnected devices to eliminate the shorting between cells due to the conductive metallic substrates.

Architectural Glass Applications

One large existing market for thin films on a glass substrate has been used in the architectural glass industry to create glass windows with reflective properties to enhance the insulation. Similar coated glass using different color films has been used as architectural glass on the sides of skyscrapers. Kraft's technology is capable of preparing such glass, and, in some cases, can add a photovoltaic element to it. There is ongoing R&D effort to extend the application of building integrated photovoltaics or BIPV modules to window glass in high-rise buildings.

Kraft Market

Management believes the PV industry is currently growing from infancy to adolescence. The growth of the PV market is occurring because the energy industry is moving in a large part from fossil fuels to alternative energy sources. This transformation is also aided by the concerns of global warming, governmental incentives, political and institutional involvement and the economics of the PV industry. We believe the strongest force in causing the move from fossil fuels to PV is the economics of PV, where PV electricity costs are expected to be lower than fossil fuel generated electricity by 2010. Since the cost of the PV module represents more that 50% of the cost of installed PV systems, to manufacture the lowest cost PV modules secures the greatest competitive edge and advantage in the market place.


The market presently consists substantially of modules produced using crystalline and polycrystalline silicon. Most of the thin films that have been produced, until now, use amorphous silicon on a glass substrate. The costs of the thin film based modules are less than half of those for crystalline silicon. Based on the economic pressures by this major cost difference, Kraft believes that the ratio of crystalline to thin film in the product mix will substantially shift in the next decade.

Most of this growth has taken place using crystalline and polycrystalline modules. Kraft management believes the emergence of thin films as a lower cost alternative is now being absorbed by the market.

Kraft believes that the marketing and sale of turnkey manufacturing facilities is substantially more profitable than the marketing of individual pieces of equipment. To exploit this, Kraft has formed strategic alliances with marketing companies and technology companies doing advanced basic research in their respected fields. These include a marketing arrangement with TerraSolar pursuant to which turnkey facility consists of all the hardware and machinery manufactured, assembled, and installed by Kraft and all the software, know-how and training associated with the manufacturing process supplied by TerraSolar. In addition, Kraft is presently negotiating a research and development agreement with Renewable Energy Solutions, Inc. ("RESI") pursuant to which RESI will develop the next generation automated turnkey facility. Zoltan Kiss, a director and shareholder of the Company, is the majority owner of RESI.

Management believes the immediate greatest growth is expected from manufacturing equipment for thin film PV modules on a glass substrate through its strategic alliance with TerraSolar. As a result of this alliance, Kraft can also ensure that combining the most recent advancement in material and device technology with the equipment developments that are taking place at Kraft, Kraft can offer a state-of-the-art solution for the manufacturing of thin film based PV modules in the photovoltaic industry.

Kraft Competition

Crystalline and polycrystalline silicon presently represent substantially all of PV market. Demand for crystalline silicon has grown very rapidly over the past decade, but the electrical output prices have remained relatively unchanged. Our competitors, through their own research and development, have been developing their own pilot line manufacturing equipment for thin films. As far as we know, there are no plans for these manufacturers to also market PV module manufacturing equipment. As a result, we believe our current competitors will consist of companies that elect to build their own PV plants utilizing their internal technology and know how. However, we believe that major semiconductor manufacturers have commenced moving into the PV module manufacturing equipment. We expect that these companies will be Kraft's main competitors during the next three to five years.

Kraft Strategy

Kraft's strategy is to market complete turnkey manufacturing equipment to manufacture thin film based PV modules. Kraft intends to develop its strategy by developing the following areas:

Sale of Turnkey Facilities

Kraft's main focus is on developing the photovoltaic business. The large PV companies with technical background have been developing their own thin film manufacturing pilot lines. We believe they will buy individual machines and components from Kraft. In addition to the large technical or energy companies, there are companies that desire to sell PV modules, which on their own do not have the technical expertise to define a manufacturing process and assemble thin film factories through the purchase of components.

Together with Terrasolar or other strategic partners, we will offer a turnkey manufacturing facility that is sold installed together with guarantees of the manufacturing line, such as throughput, module efficiency, and in some cases, even manufacturing cost. Such turnkey facility consists of all the hardware and machinery manufactured, assembled, and installed by Kraft and all the software, know-how and training associated with the manufacturing process supplied by TerraSolar. In this arrangement, TerraSolar has historically been the main contractor guaranteeing process performance to the buyer, and Kraft is the developer of the facility through TerraSolar to the buyer.

Kraft also has a right to sell such turnkey facilities. In that case, either Kraft will be the main contractor, TerraSolar or other strategic partners delivering through Kraft the know-how and soft costs, or TerraSolar or other strategic partners will still remain the main contractor of the turnkey . . .



Item 9.01 Financial Statements and Exhibits

(a) Financial statements of businesses acquired.

Audited Financial Statements of Kraft for the year ended December 31, 2005 are attached hereto.

Unaudited Financial Statements of Kraft for the three months ended March 31, 2006.

(b) Pro forma financial information.

Pro forma financial information.

(c) Shell company transactions.

See Items 9.01(a) and 9.01(b).


(d) Exhibits

Exhibit No.   Description of Exhibit

4.1           Securities Purchase Agreement dated June 14,
              2006 by and among the Company and the June
              2006 Investors (2)

4.2           Registration Rights Agreement dated June 14,
              2006 by and among the Company and the June
              2006 Investors (2)

4.3           Form of Senior Secured Convertible Note
              dated June 14, 2006 (2)

4.4           Form of Series A Common Stock Purchase
              Warrant dated June 14, 2006(2)

4.5           Form of Series B Common Stock Purchase
              Warrant dated June 14, 2006(2)

4.6           Form of Series C Common Stock Purchase
              Warrant dated June 14, 2006(2)

4.7           Form of Series D Common Stock Purchase
              Warrant dated June 14, 2006(2)

4.8           Security Agreement dated June 14, 2006 by
              and between the Company and Smithfield
              Fiduciary LLC as Collateral Agent (2)

4.9           Guaranty dated as of June 14, 2006 by and
              between Kraft Rt. and Smithfield Fiduciary
              LLC as Collateral Agent(2)

4.10          Pledge Agreement dated as of June 14, 2006
              by and between the Company and Smithfield
              Fiduciary LLC as Collateral Agent(2)

4.11          Account Receivables Lien Agreement entered
              by and between Kraft Rt. and the Investors
              dated June 12, 2006(2)

4.12          Mortgage Agreement entered by and between
              Kraft Rt. and the Investors dated June 12,
              2006 (2)

4.13          Security Agreement entered by and between
              Kraft Rt. and the Investors dated June 12,
              2006 (2)

4.14          Securities Purchase Agreement dated
              September 22, 2005 by and among the Company
              and Iroquois Master Fund Ltd., Smithfield
              Fiduciary LLC and Lilac Ventures Master Fund
              (4)

4.15          Form of Senior Secured Convertible Note
              September 23, 2005 (4)

4.16          Security Agreement dated September 22, 2005
              by and among the Company and Iroquois Master
              Fund Ltd., Smithfield Fiduciary LLC and
              Lilac Ventures Master Fund (4)

4.17          Guaranty of Payment (4)

4.18          Form of Amended and Restated Note issued on
              due March 20, 2007

4.19          Form of Warrant issued on March 16, 2006(1)

4.20          Securities Purchase Agreement dated March
              16, 2006

4.21          Amendment No. 1 to the Securities Purchase
              Agreement dated May 18, 2006

4.22          Amendment No. 1 to the Senior Secured
              Convertible Note

4.23          Amendment No. 1 to the Subscription
              Agreement for the purchase of shares of
              common stock.

10.1          Securities Purchase Agreement dated March
              16, 2006 by and between the Company, Kraft
              Rt., Zoltan Kiss and Dr. Laszlo Farkas (1)

10.2          Securities Purchase Agreement dated March
              20, 2006 by and between the Company, Kraft
              Rt., Nagyezsda Kiss, Joseph Gregory Kiss,
              Maria Gabriella Kiss and Gyula Winkler (1)

10.3          Securities Purchase Agreement dated May 20,
              2006 by and between the Company, Kraft Rt.,
              Joel Spival and Jacqueline Spivak(2)

10.4          Secured Promissory Note made by Kraft Rt.
              dated September 28, 2005 (4)


10.5     Security Interest and Pledge Agreement
         entered by and between Solar Thin Films,
         Inc. , Kraft Rt. and Zoltan Kiss. (4)

10.6     Agreement of Settlement entered on September
         27, 2005 by and among Solar Thin Films,
         Inc., North Sound Legacy International Ltd.
         and North Sound Legacy Institutional Fund
         LLC (4)

10.7     Supplemental Agreement entered on September
         22, 2005 by and among Altitude Group, LLC,
         Birch Associates, Inc., and D.C. Capital LLC
         and Solar Thin Films, Inc. (4)

10.8     Amendment No. 1 to the Share Purchase
         Agreement dated December 29, 2005 (5)

10.9     Letter Agreement by and between the Company
         and Kraft Rt. (5)

16.1     Letter from Seligson and Giannattasio, LLP
         (to be filed by amendment)

(1) Incorporated by reference to the Form 8-K Current Report filed on March 23, 2006
(2) Incorporated by reference to the Form 8-K Current Report filed on June 19, 2006
(3) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 15, 2005
(4) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 30, 2005
(5) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 30, 2005

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