Item 2. Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
All references to “Holdings”, “we”, “our,” “us” and the “Company” in this Item 7 refer to EMAV Holdings, Inc. and our wholly owned subsidiary, Electric Motors and Vehicles Company (“EMAV”).
The discussion in this section contains forward-looking statements. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “would” or “will” or the negative of these terms or other comparable terminology, but their absence does not mean that a statement is not forward-looking. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, which could cause our actual results to differ from those projected in any forward-looking statements we make. Several risks and uncertainties we face are discussed in more detail under “Risk Factors” in in the 2013 Annual Report filed with the Securities and Exchange Commission on April 15, 2014. You should, however, understand that it is not possible to predict or identify all risks and uncertainties and you should not consider the risks and uncertainties identified by us to be a complete set of all potential risks or uncertainties that could materially affect us. You should not place undue reliance on the forward-looking statements we make herein because some or all of them may turn out to be wrong. We undertake no obligation to update any of the forward-looking statements contained herein to reflect future events and developments, except as required by law. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing in the 2013 Annual Report filed with the Securities and Exchange Commission on April 15, 2014 and elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.
Overview
Company Overview
Electric Motors and Vehicles Company (“EMAV”) was started in March 2010 with the intent of bringing to market rugged electric vehicles. The business was initially focused on developing a relationship with the Jeep brand as that was the desired model to use for EMAV’s electric vehicles. EMAV designed a trailer/camper in conjunction with the MOPAR division of Jeep. The camper was approved as the first camper to be branded as a Jeep. EMAV sold the Jeep Camper directly through dealerships in 2010 and 2011. EMAV abandoned its involvement in the project in 2011 due to slow sales and the lack of financial resources to support marketing for the program.
Through 2011 and 2012, EMAV focused its efforts on electric vehicle technology to be used in vehicles it planned to introduce. EMAV also developed the Power Regeneration Unit (“PRU”). It is a small camper designed to be towed behind an electric vehicle and is designed to significantly increase the range of the electric vehicle. EMAV has not commercialized the PRU and has not sold any units of the PRU. It is anticipated that at some time in the future the PRU may become one of the products offered by EMAV.
In 2013, EMAV once again focused its efforts on bringing to market a rugged electric vehicle. EMAV is described as a new car company which we propose to operate out of (i) a Jeep dealership we propose to acquire; and, (ii) an assembly facility we propose to lease. EMAV will design, assemble, and sell premium rugged sport adventure vehicles (“SAVs”), to consumers, with an emphasis on offering electric versions, in addition to commercial products for the construction, fleet, military, homeland security and related industries. EMAV intends to acquire a Jeep automotive dealership through which it will conduct certain aspects of its operations, and which will also afford EMAV access to Jeep vehicles which will serve as the platform/foundation for its vehicle sales. The automotive industry has invested heavily in electric vehicle technology and most manufacturers are now introducing electric vehicles as part of their product line. In addition, a number of new companies have emerged which exclusively manufacture and sell electric vehicles. EMAV intends to be unique in the marketplace in that its proposed signature vehicle, the ES, will be based upon an existing iconic vehicle;vehicle, the 4-door Jeep Wrangler.
On December 27, 2013, we acquired all of the issued and outstanding common shares of EMAV in exchange for issuing 38,840,525 shares of our common stock. In addition, we assumed the obligations of EMAV to issue common shares pursuant to all outstanding warrants. Following the closing of the merger, EMAV became our wholly-owned subsidiary and the combined entity solely engaged in EMAV’s business. EMAV iswas the acquirer for financial reporting purposes and EMAV Holdings, Inc. iswas the acquired company. The merger is beingwas accounted for as a reverse-merger and recapitalization. Consequently, the assets and liabilities and the operations that will beare reflected in the historical financial statements prior to the merger will beare those of EMAV and will beare recorded at the historical cost basis, and the consolidated financial statements after completion of the merger will include the assets and liabilities of the Company and EMAV, and the historical operations of EMAV and operations of the combined company from the closing date of the merger. Subsequent to the merger, our operations are consolidated with the operations of EMAV.
EMAV has generated limited revenues from product sales, and no revenue from product sales during the threesix months ended March 31,June 30, 2014 and 2013, and for years ended December 31, 2013, 2012 and 2011. To date, we have funded our operations through the private sale of equity securities. We do not expect to generate revenue from product sales for at least the next nine months.
We have an accumulated deficit of $1,280,350$1,393,558 as of March 31,June 30, 2014. Our net loss for the periodsix months ended March 31,June 30, 2014 was $205,700$318,908 as compared to $21,073$86,284 for the same comparable period in 2013. Substantially all of our operating losses resulted from expenses incurred in connection with development of our vehicles and general and administrative costs associated with our operations.
We expect to continue to incur significant expenses and increasing operating losses for at least the next two to four years. In the near term, we anticipate that our expenses will increase as we:
complete our initial vehicle offering;
enter into production and marketing of our initial vehicle offering;
continue our development additional vehicle offerings;
maintain, expand and protect our intellectual property portfolio; and
provide general and administrative support for our operations.
To fund our future operations we will need to raise additional capital. The amount and timing of future funding requirements will depend on many factors, including the timing and results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs, and related general and administrative support. We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources. We cannot be certain that anticipated additional financing will be available to us on favorable terms, or at all.
Financial Operations Overview
Revenue and Cost of Goods Sold
We have not earned revenues from product sales for the threesix months ended March 31,June 30, 2014 and 2013, respectively. Revenues earned and cost of goods sold from March 11, 2010 (Inception) to March 31, 2014 were $308,722 and $292,175, respectively. We do not expect to earn revenues from product sales for at least the next nine months. We may never generate revenues from product sales as we may never succeed in selling our initial vehicle or commercializing any other products or vehicles.
Operating Expenses
Operating expenses consisting of General and Administrative expense (“G&A”) and depreciation, for the three months and six months ended March 31,June 30, 2014 were $200, 689$108,196 and $308,885 as compared to $21,073$64,827 and $85,900 for the same comparable period in 2013. Operating expenses increased by $179,616$43,369 and $222,985 for the three months and six months ended June 30, 2014 when compared to the same comparable periods in 20142013, primarily due to the increase in general and administrative expense and depreciation expense. Operating expenses recorded from March 11, 2010 (Inception) to March 31, 2014 were $1,160,449.
General and administrative expense (G&A)(“G&A”) was $199,195$104,869 and $21,073$304,064 for the three months and six months ended March 31,June 30, 2014 as compared to $64,827 and 3013,$85,900 for the same comparable periods in 2013, respectively. G&A expense increased in 2014 over 2013 by $178,122 primarily due to the increase in (a) consulting expenses related to development plans of our business and initial design of our vehicle, (b) expenses related to finance, business development and support functions, (c) travel expenses, (d) professional fees for auditing, tax and legal services, and (e) expenses for the cost of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims. G&A expense recorded from March 11, 2010 (Inception) to March 31, 2014 was $1,153,987.
We expect that general and administrative expenses will increase materially as we operate as a public company. These increases will likely to include salaries and related expenses, legal and consulting fees, accounting and audit fees, director fees, increased directors’ and officers’ insurance premiums, fees for investor relations services and enhanced business and accounting systems, and other costs.
Depreciation expense for the three months periodand six months ended March 31,June 30, 2014 and 2013 was $1,494$3,327 and $4,821, as compared to $0 and $0 respectively.for the comparable periods in 2013. During the year threesix months ended March 31,June 30, 2014 and 2013, we acquired property and equipment of $37,479$40,908 and $0, respectively. Depreciation expense recorded from March 11, 2010 (Inception) to March 31, 2014 was $6,462.
Other Income and Expenses
We did not record any other income for the three month periodmonths and six months ended March 31,June 30, 2014 and 2013.2013, respectively.
Other expenses consisted of interest expense of $5,011$5,012 and $0$10,023 for the three month periodmonths and six months ended March 31,June 30, 2014 as compared to $384 and $384 for the same comparable periods in 2013, respectively. Interest expense was accrued and recorded on a $53,000 stockholder loan obtained by us on May 23, 2013 for our working capital needs.requirements. In conjunction with the execution of $53,000 stockholder loan, we issued 100,000 shares of our common stock to the lender as additional consideration, and recorded a debt discount of $30,000 which is being accreted to interest expense over the term of the loan. For the three month periodmonths and six months ended March 31,June 30, 2014, we recorded an interest expense of $4,091 and $8,185 related to the accretion of debt discount.discount as compared to $0 for the same comparable periods in 2013. In addition, we recorded interest expense of $920$921 and $1,838 on the principal balance borrowed from the stockholder for the three month periodmonths and six months ended March 31, 2014. Total interest expense recorded from May 23, 2013June 30, 2014 as compared to March 31, 2014 was $16,800. We did not borrow any funds during the three month period ended March 31, 2013.
The Company recorded a write-down of property$384 and equipment of $18,648 from March 11, 2010 (Inception) to March 31, 2014 due to the assessed impairment of value.
In June 2010, we acquired three limited liability companies (the “LLCs”) registered in the state of Indiana, with the purpose to start a consortium of manufacturers and suppliers for our electric vehicles. We issued in 2010, 202,000 shares of our common stock valued at $101,000$384 for the purchase of the LLCs. The common shares were valued at $0.50 per share fair value based upon contemporaneous cash sales of shares by the Company on the date of authorization by the Board for their issuance. Management subsequently revised its strategy and business plans and dissolved each of the three LLCssame comparable periods in July 2013. The LLCs had no assets, no employees, no bank accounts, and no money-making operations since their formation. We recorded a write-off of investments in LLCs of $101,000 for the year ended December 31, 2010. Total write-off of investments in LLCs recorded by us from March 11, 2010 (inception) to March 31, 2014 was $101,000.
Liquidity and Capital Resources
Since our inception, our operations have been primarily financed through private sales of our equity. We have devoted our resources to funding the development of our initial vehicle. We have incurred operating losses in each year since our inception, and we expect to continue to incur operating losses into the foreseeable future as we advance the ongoing development of our initial vehicle.
As of March 31,June 30, 2014 we had $40,276$31,817 of cash and cash equivalents compared to $125,450 at December 31, 2013. We believe that our existing capital resources, together with interest thereon, will not be sufficient to meet our projected operating requirements for at least the next 12 months and we will need to raise additional capital. Based on our operating plan, we will need additional funds to meet operational needs and capital requirements for product development and commercialization. We currently have no credit facility or committed sources of capital. To fund future operations, we will need to raise additional capital and our requirements will depend on many factors, including the following:
Funding may not be available to us on acceptable terms or at any terms. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or even suspend development of our initial vehicle. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, grants from the federal government, debt financings, collaborations, strategic alliances, licensing arrangements, and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our vehicle and future revenue streams, and we may have to grant licenses on terms that may not be favorable to us. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.
The accompanying financial statements for the three monthsix months period ended March 31,June 30, 2014 and 2013 have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have continuing net losses and negative cash flows from operating activities. In addition, we have deficiencies in working capital as of most of the balance sheet dates. These conditions raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. These circumstances caused our independent registered public accounting firm to include an explanatory paragraph in their report dated April 15, 2014, regarding their concerns about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to obtain additional financing as may be required to fund current operations. Management’s plans include selling our common stock to investors to raise working capital for operations and there is no assurance these plans will be realized.
Operating Activities
Net cash used in operating activities for the three month periodsix months ended March 31,June 30, 2014 was $201,195$316,287 which resulted primarily from the loss of $205,700,$318,908, depreciation of $1,494,$4,821, amortization of debt discount of $4,091,$8,185, increase in prepaid expenses of $6,000, decrease in accounts payable of $2,000,$5,000, and increase in accrued liabilities of $920.$615. Net cash used in operating activities for the threesix months ended March 31,June 30, 2013 was $25,810,$90,788, which resulted due to the net loss of $21,073$86,284 for the threesix months ended March 31,June 30, 2014, and increase in accounts receivable of $4,737.
Net cash used in operating activities from March 11, 2010 (Inception) to March 31, 2014 was $1,120,993, which resulted primarily from the loss of $1,280,350 , offset by depreciation of $6,462, write down of fixed assets of $18,648, write-off of investments in three LLCs of $101,000, issuance of founder shares for services for $35,932, amortization of debt discount of $13,636, increase in accounts receivable of $29,433, increase in accounts payable of $10,000,$4,837 and increase in accrued liabilities of $3,112.$333.
Investing Activities
Net cash used in investing activities for the three month periodsix months ended March 31,June 30, 2014 was $37,479$40,908 due to purchase of property and equipment. Net cash used in investing activities for the threesix month period ended March 31,June 30, 2013 was $0. Net cash used in investing activities from March 11, 2010 (Inception) to March 31, 2014 was $63,384 primarily due to purchase of property and equipment.
Financing Activities
Net cash provided by financing activities for the three month periodsix months ended March 31,June 30, 2014 was $153,500$263,562 primarily due to the receipt of cash proceeds of $153,500$237,500 received from sale of common stock.stock, cash proceeds of $40,000 received as a loan from a stockholder, and cash payments of $13,938 against the loan received from a stockholder. Net cash provided by financing activities for the three month periodsix months ended March 31,June 30, 2013 was $29,583$138,934 primarily as a result of cash proceeds of $89,400 received from the sale of common stock, for the receipt of cash proceeds of $30,000, offset$53,000 received on a loan provided by neta stockholder, cash payments of line of credit of $17$2,949 towards loan payable, and net cash payments of $517 towards a short term loan and a line of $400.credit.
Net cash provided by financing activities from March 11, 2010 (Inception) to March 31, 2014 was $1,224,653 primarily due to the receipt of cash proceeds of $1,174,602 from sale of common stock. The Company had executed a promissory note on May 23, 2013 and received $53,000 from a stockholder for its working capital requirements. The Company has made cash payment of principal of $2,949 as of March 31, 2014.
As a result of the above activities, we experienced a net decrease in cash of $85,174$93,633 for the three month period ended March 31, 2014, an increase in cash of $3,773 for the threesix months ended March 31, 2013,June 30, 2014, and an increase in cash of $40,276 from March 10, 2011 (Inception) to March 31, 2014.$48,146 for the six months ended June 30, 2013. Our ability to continue as a going concern is still dependent on our success in obtaining additional financing from investors or from sale of our common stock.
Contractual Commitments and Contingencies
The following table summarizes our obligations and commitments to make future payments under our contractual obligations:
Contractual Obligations
Stockholder NoteNotes Payable
On May 23, 2013, we executed a promissory note (the “Note”“Note 2”) with a stockholder third party lender in the principal amount of $53,000. The terms of the Note 2 required us to make (a) a principal payment of $3,000 on or before June 6, 2013, and (b) fifteen (15) monthly payments of $3,790 each, including principal and interest, beginning February 2014 through April 2015, at which time the entire principal amount, plus any and all accrued interest shall be due and payable. We made the principal payment of $3,000$2,949 before June 6, 2013.
On June 18, 2014, the Company executed a promissory note (the “Note 1”) with a stockholder third party lender in the principal amount of $40,000. The terms of the Note 1 require the Company to make (a) monthly interest only payments (5% annual rate) starting on September 18, 2014; (b) twenty-four (24) payments of $3,290 each, including principal and interest, beginning May 18, 2015 through April 18, 2017, at which time the entire principal amount, plus any and all accrued interest shall be due and payable; and, (c) in the event of an investment or series of related investments of at least $5,000,000 before April 18, 2017, then the entire principal balance and all accrued and unpaid interest shall be due in full in addition to a $5,000 prepayment penalty.
The following table shows our contractual obligation to make the payments in accordance with the terms of the Note.Notes.
For the twelve months ended March 31, 2015 | | | |
December 31, 2014 | | $ | 50,051 | |
| | | | |
Total Contractual Obligations | | $ | 50,051 | |
Contractual Obligations for the year ended December 31: | |
| | | | | | | | | |
| | Note 1 | | | Note 2 | | | Total | |
2014 | | $ | 667 | | | $ | 30,321 | | | $ | 30,988 | |
2015 | | | 26,989 | | | | 11,370 | | | | 38,359 | |
2016 | | | 39,484 | | | | - | | | | 39,484 | |
2017 | | | 13,161 | | | | - | | | | 13,161 | |
Total | | $ | 80,301 | | | $ | 41,691 | | | $ | 121,992 | |
Other Obligations
In October 2013, we entered into a settlement agreement with a creditor to pay $15,000 of which we paid $3,000 in November 2013 and agreed to pay twelve monthly installments of $1,000 each starting December 2013. We haveAs of June 30, 2014, we had made payments in the amount of $5,000 covering the fiveeight months ended April 30, 2014, and the remaining liability on the settlement was $7,000. Subsequent to June 30, 2014, we plan to make a payment of $3,000 for the three months covering May, June and July 2014. Demand for payment of the $3,000 has not yet been received by the Company.
JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements which we have prepared in accordance with U.S. generally accepted accounting principles. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We have identified the following accounting policies that we believe require application of management’s most subjective judgments, often requiring the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our actual results could differ from these estimates and such differences could be material.
While our significant accounting policies are described in more detail in Note 2 of our annual consolidated financial statements included in the 2013 Annual Report, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Accounts and Advances Receivable
Accounts receivable represent income earned from sale of products for which the Company has not yet received payment. Accounts receivable are recorded at the invoiced amount and stated at the amount management expect to collect from balances outstanding at period-end. Management estimates the allowance for doubtful accounts based on an analysis of specific accounts and an assessment of the customer’s ability to pay.
The Company reviews its advances receivable for impairment whenever events or changes in circumstances indicate that the carrying amount of the receivable may not be recovered. If such receivables are considered to be impaired, the impairment loss recognized in operations is the amount by which the carrying value exceeds the fair value of the receivable.receivables.
Revenue Recognition
The Company recognizes revenues when persuasive evidence of an arrangement exists; delivery has occurred; price is fixed or determinable; and collectability of the related receivable is reasonably assured. The Company closely follows the provisions of ASC 605, “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104.
Development Stage Risk
The Company has earned minimal revenues from operations. Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Enterprise” as set forth in Accounting Standards Codification (“ASC”) 915, “Development Stage Entities”. Among the disclosures required by ASC 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations, shareholders’ equity (deficit) and cash flows disclose activity since the date of the Company’s inception.
Stock-Based Compensation
In accordance with ASC 718, Compensation – Stock Compensation, the Company accounts for share-based payments to employees using the fair value method. All transactions in which goods or services are received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The Company generally uses the Black-Scholes option pricing method to compute the fair value of options or warrants granted for goods or services.
Share based payments to non-employees are accounted for under the measurement and recognition criteria of ASC 505-50 “Equity Based Payments to Non-Employees”.
Off-Balance Sheet Arrangements
We have not engaged in any off-balance sheet arrangements as defined in Item 303(c) of the SEC’s Regulation S-K. We did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special-purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Newly adopted accounting pronouncements
On June 10, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation (“ASU 2014-10”). ASU 2014-10 eliminates the requirement to present inception-to-date information about income statement line items, cash flows, and equity transactions, and clarifies how entities should disclose the risks and uncertainties related to their activities. ASU 2014-10 also eliminates an exception provided to development stage entities in Consolidations (ASC Topic 810) for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The presentation and disclosure requirements in Topic 915 are no longer required for interim and annual reporting periods beginning after December 15, 2014, however, early adoption is permitted. The Company adopted the provisions of ASU 2014-10 for this quarterly report on Form 10-Q for the period ended June 30, 2014.
In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-02 or ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires reporting and disclosure about changes in accumulated other comprehensive income balances and reclassifications out of accumulated other comprehensive income.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”), and as provided in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
Item 4. Controls and Procedures.
Item 4. | Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission, or SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
As required by Rule 13a-15(b) under the Exchange Act, our management conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on the foregoing evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective.
Changes in Our Controls
There were no changes in our internal controls over financial reporting during the threesix months ended March 31,June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Item 1. | Legal Proceedings. |
From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of our business. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and any adverse result in these or other matters may arise from time to time that could harm our business. The Company’s officers and directors are not aware of any threatened or pending litigation to which the Company is a party or which any of its property is the subject and which would have any material, adverse effect on the Company.
The section entitled “Risk Factors” in in the 2013 Annual Report filed with the Securities and Exchange Commission on April 15, 2014 is hereby incorporated by reference in this report as if set forth herein in its entirety.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
During the three months ended March 31,June 30, 2014 we completed closing of a private placementplacements pursuant to which we sold a total of 307,000168,000 shares of our common stock. The shares of common stock issued in this offering were offered and sold without registration under the Securities Act, or state securities laws, in reliance on the exemptions provided by Section 4(a)(2) (previously 4(2)) of the Securities Act and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws, based on the lack of any general solicitation or advertising in connection with the sale of the securities; the representation of the investor to the Company that it is an accredited investor (as that term is defined in Rule 501 of Regulation D) and that it was purchasing the securities for its own account and without a view to distribute them. The shares were sold at a per share purchase price of $0.50 per share, resulting in $153,500$84,000 in aggregate proceeds to the Company.
On March 31, 2014, in connection with promissory note executed by the Company on May 23, 2013 with a third party lender in the principal amount of $53,000 (the “Note”), the Company issued 100,000 shares of its common stock to the third party lender. The shares of common stock issued under the Note, and the Note itself, were offered and sold without registration under the Securities Act, or state securities laws, in reliance on the exemptions provided by Section 4(a)(2) (previously 4(2)) of the Securities Act and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws, based on the lack of any general solicitation or advertising in connection with the sale of the securities; the representation of the lender to the Company that it is an accredited investor (as that term is defined in Rule 501 of Regulation D) and that it was purchasing the securities for its own account and without a view to distribute them.
Subsequent to our fiscal quarter ended March 31, 2014 and prior to May 14, 2014 we received $67,500 from the sale of 135,000 shares of our common stock in private placements. The shares of common stock issued were offered and sold without registration under the Securities Act, or state securities laws, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws, based on the lack of any general solicitation or advertising in connection with the sale of the securities; the representation of each investor to the Company that it is an accredited investor (as that term is defined in Rule 501 of Regulation D) and that it was purchasing the securities for its own account and without a view to distribute them. The securities may not be offered or sold in the United States without an effective registration statement or pursuant to an exemption from applicable registration requirements. We have used, and intend to continue to use, the remaining proceeds from the offering for working capital and general corporate purposes.
Item 3. Defaults Upon Senior Securities.
Item 3. | Defaults Upon Senior Securities. |
None.
Item 4. Mine Safety Disclosures.
Item 4. | Mine Safety Disclosures. |
None.
Item 5. Other Information.
Item 5. | Other Information. |
None.
| The following Exhibits are filed as part of this Quarterly Report pursuant to Item 601 of Regulation S-K: |
Exhibit Number | | Description |
| | |
2.1.1 | | Agreement and Plan of Merger dated December 5, 2007(1) |
| | |
2.1.2 | | Certificate of Merger - Delaware - dated December 5, 2007(1) |
| | |
2.1.3 | | Articles of Merger - Florida - dated December 7, 2007(1) |
| | |
2.1.4 | | Certificate of Merger – Delaware - dated September 20, 2011 (2) |
| | |
2.1.5 | | Agreement and Plan Of Merger Dated December 27, 2013 By and Among EMAV Holdings, Inc., Electric Motors and Vehicles Company, and EV Pop Acquisition Company (3) |
3.1.1 | Certificate of Incorporation dated May 14, 1987(1) |
| | |
3.1.2 | | Articles of Amendment dated June 30, 1998(1) |
| | |
3.1.3 | | Articles of Amendment dated November 12, 1998(1) |
| | |
3.1.4 | | Articles of Amendment dated June 22, 2006(1) |
| | |
3.1.5 | | Certificate of Incorporation of Delaware entity dated October 11, 2007(1) |
| | |
3.1.6 | | Articles of Amendment dated October 18, 2007(1) |
| | |
3.1.7 | | Certificate of Amendment dated August 27, 2008(1) |
3.1.8 | | Amendment to Certificate of Incorporation dated December 27, 2013 (3) |
| | |
3.1.9 | | Certificate of Merger dated December 27,2013 (3) |
| | |
3.2.1 | | Florida Amended and Restated By-Laws(1) |
| | |
3.2.2 | | Delaware Amended and Restated By-Laws(1) |
| | |
10.1 | | Stock Purchase Agreement dated March 31, 2010 by and between the Company and Bedrock Ventures,BedrockVentures, Inc. (4) |
| | |
10.2 | | Repurchase Agreement dated April 1, 2010 by and among the Company and CENTURY CAPITALCENTURYCAPITAL PARTNERS, LLC, and CORPORATE SERVICES INTERNATIONAL, INC. (4) |
| | |
31.1 | | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302Section302 of the Sarbanes-Oxley Act of 2002(*) |
| | |
31.2 | | Certification of the Chief Financial Officer and Chief Operating Officer pursuant to Section 302Section302 of the Sarbanes-Oxley Act of 2002(*) |
| | |
32.1 | | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906Section906 of the Sarbanes Oxley Act of 2002(*) |
| | |
32.2 | | Certification of the Chief Financial Officer and Chief Operating Officer pursuant to Section 906Section906 of the Sarbanes Oxley Act of 2002(*) |
| | |
101*+ | | The following materials from the Company’s Annual Report on Form 10-K for the annual periodannualperiod ended December 31, 2013, formatted in XBRL (eXtensible Business Reporting Language)ReportingLanguage): (i) Consolidated Balance Sheets as at December 31, 2013 and 2012;(ii) Consolidated Statements of Operations for the years ended December 31, 2013 and 2012; (iii) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2013 and 2012; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012; and (iv) Notes to Consolidated Financial Statements. |
101 INS | XBRL Instance Document* |
| |
101 SCH | XBRL Schema Document* |
| |
101 CAL | XBRL Calculation Linkbase Document* |
| |
101 DEF | XBRL Definition Linkbase Document* |
| |
101 LAB | XBRL Labels Linkbase Document* |
| |
101 PRE | XBRL Presentation Linkbase Document* |
| * The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. |
(1) | | Previously filed with the Company's Form 10 filed with the SEC on November 12, 2008 and incorporated herein by reference. |
(2) | | Incorporated by reference to Exhibit 2.1.4 to the Annual Report on Form 10-K filed with the SEC on 30 January 2012. |
(3) | | Previously filed with the Company’s Form 8-K filed on December 31, 2013 and incorporated herein by reference. |
(4) | | Previously filed with the Company’s Form 8-K filed on April 7, 2010 and incorporated herein by reference. |
(*) | | Filed herewith. |
+ | | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto shall not be deemed “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections, and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. |
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 14,August 13, 2014 | | EMAV Holdings, Inc. |
| | |
| | |
| By: | /s/ Keith A. Rosenbaum |
| | KEITH A. ROSENBAUM, |
| | Chief Executive Officer and Chief Financial Officer |
| | (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer) |
2021