Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 7-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | HPEV, INC. | |
Entity Central Index Key | 1399352 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 64,448,186 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $54,733 | $171,871 |
Prepaid expenses | 57,018 | 57,018 |
Total current assets | 111,751 | 228,889 |
Intangible | 149,043 | 139,800 |
Equipment, net | 117,052 | 118,453 |
Total assets | 377,846 | 487,142 |
Current liabilities | ||
Accounts payable | 784,911 | 529,736 |
Accrued liabilities - related party | 569,039 | 489,535 |
Customer deposits - related party | 400,000 | 400,000 |
Accrued payroll taxes | 20,852 | 14,167 |
Debt, current portion | 290,500 | 40,235 |
Total current liabilities | 2,065,302 | 1,473,673 |
Debt, long-term portion | 72,577 | 77,076 |
Total liabilities | 2,137,879 | 1,550,749 |
Commitments and contingencies (Note 5) | ||
Stockholders' deficit: | ||
Preferred stock, $.001 par value; 15,000,000 shares authorized;140 and 140 shares issued and outstanding at March 31, 2015 and December 31, 2014, Respectively | ||
Common stock, $.001 par value; 100,000,000 shares authorized; 62,559,284 and 61,439,134 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 61,887 | 60,767 |
Additional paid-in capital | 31,647,161 | 30,864,669 |
Common stock issuable | 239,980 | 435,930 |
Common stock held in escrow | 8,441 | 8,441 |
Accumulated deficit | -33,699,581 | -32,421,145 |
Total HPEV deficit | -1,742,112 | -1,051,338 |
Noncontrolling interest in subsidiary | -17,921 | -12,269 |
Total stockholders' deficit | -1,760,033 | -1,063,607 |
Total liabilities and stockholders' equity | $377,846 | $487,142 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Stockholders' Equity (Deficit): | ||
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 15,000,000 | 15,000,000 |
Preferred stock shares issued | 140 | 140 |
Preferred stock shares outstanding | 140 | 140 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 100,000,000 | 100,000,000 |
Common stock shares issued | 62,559,284 | 61,439,134 |
Common stock shares outstanding | 62,559,284 | 61,439,134 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Condensed Consolidated Statements Of Operations | ||
Revenue | ||
Cost of revenues | ||
Gross profit | ||
Operating expenses | ||
Payroll and related expenses | 214,925 | 197,511 |
Consulting | 130,423 | 6,502,145 |
Professional fees | 147,860 | 103,898 |
Research and development | 299,645 | 176,074 |
General and administrative | 489,277 | 8,106,259 |
Total operating expenses | 1,282,130 | 15,085,887 |
Operating loss | -1,282,130 | -15,085,887 |
Interest expense, net | -1,958 | -7,839 |
Net loss | -1,284,088 | -15,093,726 |
Less: Noncontrolling interest in net loss | -5,652 | |
Net loss to HPEV shareholders | ($1,278,436) | ($15,093,726) |
Net loss per common share: Basic and diluted | ($0.02) | ($0.30) |
Weighted average common shares outstanding: Basic and diluted | 61,583,086 | 50,511,090 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Operating Activities: | ||
Net loss | ($1,284,088) | ($15,093,726) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock issued for services | 31,200 | 302,250 |
Warrants issued for services | 4,462 | 6,077,735 |
Employee stock options | 327,000 | 7,950,000 |
Depreciation expense | 6,401 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses | -14,107 | |
Accounts payable | 255,175 | -106,555 |
Accrued liabilities - related party | 79,504 | 100,570 |
Accrued payroll liabilities | 6,685 | 24,533 |
Net cash used in operating activities | -573,661 | -759,300 |
Investing Activities: | ||
Intangible assets | -9,243 | -15,236 |
Equipment purchase | -5,000 | |
Net cash used in investing activities | -14,243 | -15,236 |
Financing Activities: | ||
Proceeds from sale of common stock | 225,000 | 2,816,652 |
Proceeds from debt | 250,000 | |
Payments on debt | -4,234 | |
Net cash provided by financing activities | 470,766 | 2,816,652 |
Net (decrease) increase in cash | -117,138 | 2,042,116 |
Cash, beginning of period | 171,871 | 477,549 |
Cash, end of period | 54,733 | 2,519,665 |
Cash paid for: Interest | 1,416 | 7,848 |
Cash paid for: Income taxes | ||
Non-cash transactions: | ||
Reduction of stock issuable by issuing common stock | $410,950 |
Description_of_Business_and_Su
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Note 1 - Description of Business and Summary of Significant Accounting Policies | Description of Business |
HPEV, Inc. and subsidiary, (we, us, our, the “Company” or “HPEV”) was incorporated in the State of Nevada in July 2002. In April 2014, we formed Ultimate Power Truck, LLC (“Ultimate Power Truck” or “UPT”), of which we own 95% and a shareholder of HPEV owns 5%. We were formerly known as Bibb Corporation and as Z3 Enterprises. | |
We have developed and intend to commercialize heat dispersion technologies in various product platforms, and have developed and intend to commercialize an electric load assist technology around which we have designed a vehicle retrofit system. In preparation, we have applied for trademarks for one of our technologies and its acronym. We currently have two trademarks in the application process: HPEV and TEHPC. We believe that our proprietary technologies, including our patent portfolio and trade secrets, can help increase the efficiency and positively affect manufacturing cost structure in several large industries beginning with motors/generators and fleet vehicles. The markets for products utilizing our technology include consumer, industrial and military markets, both in the U.S. and worldwide. | |
Our technologies are divided into three distinct but complementary categories: a) mobile power generation, b) heat dispersion technology and c) electric load assist. As of March 31, 2015, we have five patents and seven patent applications pending in the area of composite heat structures, motors, and related structures, heat pipe architecture, applications (commonly referred to as “thermal” or “heat dispersion technology”) and a parallel vehicle power platform. We intend to commercialize our patents by licensing our thermal technologies and applications to electric motor, pump and vehicle component manufacturers; by licensing or selling a mobile electric power system powered by our proprietary gearing system to commercial vehicle and fleet owners; and by licensing a plug-in hybrid conversion system for heavy duty trucks, buses and tractor trailers to fleet owners and service centers. | |
Basis of Presentation | |
The accompanying condensed consolidated balance sheet as of December 31, 2014, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Noncontrolling interest represents the 5% third party ownership of our subsidiary, UPT. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. | |
Going Concern | |
The accompanying condensed consolidated financial statements have been prepared assuming we will continue as a going concern. We have incurred net losses of $33,699,581 since inception and have not fully commenced operations, raising substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to generate revenue, achieve profitable operations and repay our obligations when they come due. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. As of the filing date of this Quarterly Report on Form 10-Q, management is negotiating additional funding arrangements to support completion of the initial phases of our business plan: to license its thermal technologies and applications, including submersible dry-pit applications; to license and sell mobile generation retrofit kits (our Ultimate Power Truck business) driven by our proprietary gearing system; and to license a plug-in hybrid conversion system for heavy duty trucks, tractor trailers and buses. There can be no assurance, however, that we will be successful in accomplishing these objectives. | |
Recently Issued Accounting Pronouncements | |
We have evaluated the other recent accounting pronouncements through ASU 2015-03 and believe that none of them will have a material effect on our financial statements. |
Equipment
Equipment | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Note 2 - Equipment | Equipment consists of the following: | ||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Test vehicles | $ | 124,687 | $ | 124,687 | |||||
Other | 5,000 | -- | |||||||
129,687 | 124,687 | ||||||||
Less: accumulated depreciation | (12,635 | ) | (6,234 | ) | |||||
$ | 117,052 | $ | 118,453 | ||||||
Depreciation expense for the quarter ended March 31, 2015 and 2014, respectively, was $6,401 and zero. |
Customer_deposits_Related_part
Customer deposits - Related party | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Note 3 - Customer deposits - Related party | These represent advance payments of $400,000 received on orders that have not yet been fulfilled, with companies controlled by the individual who is the 5% owner of UPT and a shareholder of HPEV. |
Debt
Debt | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Note 4 - Debt | Debt consists of the following: | ||||||||
March 31, | 31-Dec | ||||||||
2015 | 2014 | ||||||||
Note payable – officer | $ | 22,910 | $ | 22,910 | |||||
Note payable – UPT minority owner | 250,000 | -- | |||||||
Test vehicle financing | 90,167 | 94,401 | |||||||
363,077 | 117,311 | ||||||||
Less: current portion | 290,500 | 40,235 | |||||||
$ | 72,577 | $ | 77,076 | ||||||
The note payable – officer is non-interest bearing and is due on demand, payable to the Secretary of HPEV. | |||||||||
The note payable – UPT minority owner is with the 5% owner of UPT. The terms of the note have not been finalized. | |||||||||
In October 2014, we entered into financing agreements for the purchase of test vehicles, bearing interest at 5.99% payable monthly over five years, collateralized by the vehicles. | |||||||||
Future contractual maturities of debt are as follows: | |||||||||
Year ending December 31, | |||||||||
2015 | $ | 286,001 | |||||||
2016 | 18,410 | ||||||||
2017 | 19,563 | ||||||||
2018 | 20,788 | ||||||||
2019 | 18,315 | ||||||||
$ | 363,077 |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Note 5 - Commitments and Contingencies | On December 12, 2012, we concluded negotiations on a debt settlement agreement by and among the Company, Phoenix Productions and Entertainment Group (“PPEG”), Action Media Group, LLC (“Action Media”) and Spirit Bear Limited (“Spirit Bear”) (PPEG and Action Media collectively, the “Debt Holders”). The Debt Holders were to return to escrow a total of 4,676,000 shares of our common stock. 3,676,000 of these shares were returned and cancelled on January 14, 2013, following our filing a registration statement with the SEC on January 11, 2013. The remaining 1,000,000 shares will be purchased by the Company or a nominee of the Company at $0.40 per share (or $400,000) at the rate of $10,000 per month commencing within 90 days of the Company achieving $1,000,000 in gross revenues for products or services from business operations. PPEG and Action Media will divide the $400,000 on a pro rata basis, based on each company’s respective amount of debt forgiven. The historical cost of the shares held in escrow are reflected in equity on the balance sheets as common stock held in escrow. |
We are a party to various legal proceedings with Spirit Bear, which we are defending vigorously. At this time we cannot predict the outcome or estimate the cost to us, if any. Accordingly, we have not recorded any expense or liability associated with these proceedings. If these proceedings are not resolved in our favor, in future periods there may be an impact to our results of operations and financial position. | |
In May 2015, we executed a Settlement and Release Agreement (the “Release”) with Spirit Bear and the parties identified as the assignees of Spirit Bear who are signatories to the Release. Pursuant to the terms of the Release, the parties have agreed to resolve with finality all issues related directly to and arising from the Securities Purchase Agreement dated December 14, 2012, including dismissing all the lawsuits as well as unconditionally releasing all actions, complaints, liabilities, obligations, damages, expenses and the like among the parties and related or affiliated persons. We agreed to file a registration statement on Form S-1 covering an aggregate of 14,028,385 shares of common stock, preferred stock and common stock warrants on behalf of Spirit Bear and its assignees (the “Registration Statement”). Upon the effective date of the Registration Statement, each of the parties to the Release shall release the others from all claims the party ever had against the others, other than claims to enforce the Release and / or damages provided for in the Release. Spirit Bear and its assignees shall deliver to Spirit Bear’s counsel the 6,000,000 warrants in their possession. At the same time, the Company shall deliver to its counsel new warrants that are identical to the outstanding warrants other than with respect to an exercise price of $0.25 per share and an issue date of May 7, 2015. The 1,000,000 penalty warrants issued to Spirit Bear in 2012, related to their bridge loan made prior to their equity investment, shall also be reissued with an exercise price of $0.25. No additional shares or warrants will be issued as part of the Release. At this time, we are unable to determine the potential impact of the Release on our condensed consolidated financial statements. | |
From time to time, we may be a party to other legal proceedings. Management currently believes that the ultimate resolution of these matters, and after consideration of amounts accrued, will not have a material adverse effect on our consolidated results of operations, financial position, or cash flow. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Note 6 - Equity | Common Stock |
In the quarter ended March 31, 2015, we received $215,000 for shares of our common stock; however, the shares were not issued as of March 31, 2015, and are included in Common stock issuable within the equity section of the condensed consolidated balance sheet. | |
In February, 2014, we entered into an agreement whereby we may sell up to $10,000,000 of our common stock to Lincoln Park Capital Fund LLC (“Lincoln Park") from time to time over a 36-month period commencing on the date that a registration statement filed with the Securities and Exchange Commission (“SEC”) is declared effective by the SEC, and a final prospectus is filed. We may direct Lincoln Park to purchase up to 75,000 shares of our common stock in separate transactions not to exceed $500,000 per transaction (“Regular Purchase”). We may request multiple Regular Purchases so long as at least two business days have passed since the most recent regular purchase was completed. The price of the common shares is based on the market price of the common stock during the twelve business days preceding the request, with a floor of $0.25 per common share. If the market price of the common stock is above $0.60 per share, in certain circumstances we may direct Lincoln Park to purchase up to 150,000 shares of our common stock. The number of shares of our common stock sold to Lincoln Park is limited such that at no time will Lincoln Park have beneficial ownership of more than 9.99% of the then outstanding shares of our common stock. As part of entering into that agreement, we issued 671,785 shares of common stock as equity issuance costs for no consideration. To date, there have been no shares of our common stock sold to Lincoln Park due to the litigation with Spirit Bear. We are in discussions with Lincoln Park concerning its ability to perform under the agreement based on the litigation with Spirit Bear. |
Sharebased_payments
Share-based payments | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Note 7 - Share-based payments | Amounts recognized as expense in the consolidated statements of operations related to share-based payments are as follows: | ||||||||
Three months ended March 31, | |||||||||
2015 | 2014 | ||||||||
Nonemployee common stock | $ | 31,200 | $ | 302,250 | |||||
Nonemployee warrants | 4,462 | 6,077,735 | |||||||
Employee stock options | 327,000 | 7,950,000 | |||||||
Total share-based expense charged against income | $ | 362,662 | $ | 14,329,985 | |||||
Impact on net loss per common share: | |||||||||
Basic and diluted | $ | (0.01 | ) | $ | (0.28 | ) | |||
Nonemployee common stock | |||||||||
UPT management agreement | |||||||||
In July, 2014, we entered into an agreement with the company managing the operations of UPT, whereby we would issue common stock under the following conditions: | |||||||||
Number of Shares | |||||||||
Condition | |||||||||
UPT recognizes $100 million of revenue or a change in control | 500,000 | ||||||||
UPT recognizes $100 million of revenue | 150,000 | ||||||||
650,000 | |||||||||
As of March 31, 2015 and from the date of the agreement, meeting these conditions was not deemed probable, so no expense was recognized under this agreement and no common stock was issued. | |||||||||
Investor relations agreement | |||||||||
In June, 2014, we entered into an agreement with a company, which subsequently became a shareholder, to provide investor relations services. Under the terms of this agreement we agreed to issue 60,000 shares of common stock each quarter through May 2015, for a total of 240,000 shares. As of March 31, 2015, we have recognized the issuance of 180,000 shares. During the quarter ended March 31, 2015, we recorded expense at fair value of $31,200 for the issuance of 60,000 shares. | |||||||||
Other | |||||||||
During the quarter ended March 31, 2015, we issued no other shares of common stock in exchange for services. | |||||||||
Nonemployee common stock warrants -- Fully-vested upon issuance | |||||||||
During the quarter ended March 31, 2015, we issued no warrants that were fully-vested upon issuance. | |||||||||
Nonemployee common stock warrants -- Service and performance conditions | |||||||||
UPT management agreement | |||||||||
In July, 2014, we entered into a three year agreement with the company managing the operations of UPT, whereby we would issue common stock warrants under the following conditions: | |||||||||
Number of | |||||||||
Vesting Condition | Category | Warrants | |||||||
Fully vest upon UPT generating $1 million of revenue | Performance | 350,000 | |||||||
45,945 warrants for every $3 million of revenue generated by UPT up to $100 million | 1,530,000 | ||||||||
Performance | |||||||||
60,000 warrants for every three months of completed service managing UPT | 720,000 | ||||||||
Service | |||||||||
2,600,000 | |||||||||
The common stock warrants have a three year life and an exercise price of $1.00 per share. The grant date fair value was $2,586,000. As of March 31, 2015 and since the date of the agreement, we have not estimated meeting the performance conditions as probable, so no expense was recognized and no common stock warrants vested. During the quarter ended March 31, 2015, 60,000 of the common stock warrants under the service condition vested with the passage of time and we recognized expense of $24,877. | |||||||||
Financing advisory services | |||||||||
In March, 2014, we entered into an agreement with a company, which is also a shareholder, to provide financing advisory services, in return for 400,000 common stock warrants having a five year life and an exercise price of $2.50, with vesting in March, 2015 upon satisfactory performance under the agreement. As of December 31, 2014, we deemed it probable that the vesting conditions would be met. Accordingly, during the year ended December 31, 2014, we recognized estimated expense of $200,379. As of March 31, 2015, the service conditions were met and the award was re-valued at $179,964, resulting in a reduction in expense of $20,415 during the quarter ended March 31, 2015. | |||||||||
Summary | |||||||||
The following summarizes of the status of our nonvested common stock warrants with performance and service conditions as of March 31, 2015, and changes during the period then ended: | |||||||||
Number | Weighted-average Grant Date | ||||||||
of | Fair Value | ||||||||
Warrants | |||||||||
Nonvested, December 31, 2014 | 2,880,000 | $ | 0.98 | ||||||
Vested | (460,000 | ) | 0.99 | ||||||
Nonvested, March 31, 2015 | 2,420,000 | $ | 0.98 | ||||||
The following summarizes the Black-Scholes assumptions used to estimate the fair value of warrants with performance and service conditions during the quarter ended March 31, 2015: | |||||||||
Volatility | 184 | % | |||||||
Risk-free interest rate | 0.9 – 1.4 | % | |||||||
Expected life (years) | 3.0 – 5.0 | ||||||||
Dividend yield | -- | ||||||||
Employee stock options – Fully-vested | |||||||||
We granted no additional options during the quarter ended March 31, 2015, which were fully-vested at the date of grant. | |||||||||
Employee stock options – Market-based | |||||||||
We granted no additional options that vest upon the achievement of certain stock prices during the quarter ended March 31, 2015. No additional non-vested market-based options vested during the quarter ended March 31, 2015. |
Net_Loss_per_Share
Net Loss per Share | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Note 8 - Net Loss per Share | Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. Diluted net loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised. | ||||||||
The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted: | |||||||||
Three months ended March 31, | |||||||||
2015 | 2014 | ||||||||
Net loss available for stockholders | $ | (1,278,436 | ) | $ | (15,093,726 | ) | |||
Weighted average outstanding shares of common stock | 61,583,086 | 50,511,090 | |||||||
Dilutive effect of stock options and warrants | -- | -- | |||||||
Common stock and equivalents | 61,583,086 | 50,511,090 | |||||||
Net loss per share – Basic and diluted | $ | (0.02 | ) | $ | (0.30 | ) | |||
Outstanding stock options and common stock warrants are considered anti-dilutive because we are in a net loss position. Management has agreed to not exercise their stock options until the number of authorized shares has been increased. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Note 9 - Subsequent Events | Except as discussed in Note 5, Commitments and Contingencies, there were no events subsequent to March 31, 2015, and up to the date of this filing that would require disclosure. |
Description_of_Business_and_Su1
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Description Of Business And Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The accompanying condensed consolidated balance sheet as of December 31, 2014, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Noncontrolling interest represents the 5% third party ownership of our subsidiary, UPT. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. |
Going Concern | The accompanying condensed consolidated financial statements have been prepared assuming we will continue as a going concern. We have incurred net losses of $33,699,581 since inception and have not fully commenced operations, raising substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to generate revenue, achieve profitable operations and repay our obligations when they come due. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. As of the filing date of this Quarterly Report on Form 10-Q, management is negotiating additional funding arrangements to support completion of the initial phases of our business plan: to license its thermal technologies and applications, including submersible dry-pit applications; to license and sell mobile generation retrofit kits (our Ultimate Power Truck business) driven by our proprietary gearing system; and to license a plug-in hybrid conversion system for heavy duty trucks, tractor trailers and buses. There can be no assurance, however, that we will be successful in accomplishing these objectives. |
Recently Issued Accounting Pronouncements | We have evaluated the other recent accounting pronouncements through ASU 2015-03 and believe that none of them will have a material effect on our financial statements. |
Equipment_Tables
Equipment (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Equipment Tables | |||||||||
Equipment | Equipment consists of the following: | ||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Test vehicles | $ | 124,687 | $ | 124,687 | |||||
Other | 5,000 | -- | |||||||
129,687 | 124,687 | ||||||||
Less: accumulated depreciation | (12,635 | ) | (6,234 | ) | |||||
$ | 117,052 | $ | 118,453 | ||||||
Debt_Tables
Debt (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Tables | |||||||||
Summary of Debt | Debt consists of the following: | ||||||||
March 31, | 31-Dec | ||||||||
2015 | 2014 | ||||||||
Note payable – officer | $ | 22,910 | $ | 22,910 | |||||
Note payable – UPT minority owner | 250,000 | -- | |||||||
Test vehicle financing | 90,167 | 94,401 | |||||||
363,077 | 117,311 | ||||||||
Less: current portion | 290,500 | 40,235 | |||||||
$ | 72,577 | $ | 77,076 | ||||||
Future contractual maturities of debt | Future contractual maturities of debt are as follows: | ||||||||
Year ending December 31, | |||||||||
2015 | $ | 286,001 | |||||||
2016 | 18,410 | ||||||||
2017 | 19,563 | ||||||||
2018 | 20,788 | ||||||||
2019 | 18,315 | ||||||||
$ | 363,077 |
Sharebased_payments_Tables
Share-based payments (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Financial statements related to equity-based payments | Amounts recognized as expense in the consolidated statements of operations related to share-based payments are as follows: | ||||||||
Three months ended March 31, | |||||||||
2015 | 2014 | ||||||||
Nonemployee common stock | $ | 31,200 | $ | 302,250 | |||||
Nonemployee warrants | 4,462 | 6,077,735 | |||||||
Employee stock options | 327,000 | 7,950,000 | |||||||
Total share-based expense charged against income | $ | 362,662 | $ | 14,329,985 | |||||
Impact on net loss per common share: | |||||||||
Basic and diluted | $ | (0.01 | ) | $ | (0.28 | ) | |||
Common stock conditions | In July, 2014, we entered into an agreement with the company managing the operations of UPT, whereby we would issue common stock under the following conditions: | ||||||||
Number of Shares | |||||||||
Condition | |||||||||
UPT recognizes $100 million of revenue or a change in control | 500,000 | ||||||||
UPT recognizes $100 million of revenue | 150,000 | ||||||||
650,000 | |||||||||
Nonemployee Common stock warrants - Service and performance conditions [Member] | |||||||||
Common stock warrants performance and service conditions: | In July, 2014, we entered into a three year agreement with the company managing the operations of UPT, whereby we would issue common stock warrants under the following conditions: | ||||||||
Number of | |||||||||
Vesting Condition | Category | Warrants | |||||||
Fully vest upon UPT generating $1 million of revenue | Performance | 350,000 | |||||||
45,945 warrants for every $3 million of revenue generated by UPT up to $100 million | 1,530,000 | ||||||||
Performance | |||||||||
60,000 warrants for every three months of completed service managing UPT | 720,000 | ||||||||
Service | |||||||||
2,600,000 | |||||||||
Nonvested stock options and warrant activity | The following summarizes of the status of our nonvested common stock warrants with performance and service conditions as of March 31, 2015, and changes during the period then ended: | ||||||||
Number | Weighted-average Grant Date | ||||||||
of | Fair Value | ||||||||
Warrants | |||||||||
Nonvested, December 31, 2014 | 2,880,000 | $ | 0.98 | ||||||
Vested | (460,000 | ) | 0.99 | ||||||
Nonvested, March 31, 2015 | 2,420,000 | $ | 0.98 | ||||||
Fair value of each option award | The following summarizes the Black-Scholes assumptions used to estimate the fair value of warrants with performance and service conditions during the quarter ended March 31, 2015: | ||||||||
Volatility | 184 | % | |||||||
Risk-free interest rate | 0.9 – 1.4 | % | |||||||
Expected life (years) | 3.0 – 5.0 | ||||||||
Dividend yield | -- | ||||||||
Net_Loss_per_Share_Tables
Net Loss per Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Net Loss Per Share Tables | |||||||||
Reconciliation of the denominators used in the computation of net loss per share basic and diluted: | The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted: | ||||||||
Three months ended March 31, | |||||||||
2015 | 2014 | ||||||||
Net loss available for stockholders | $ | (1,278,436 | ) | $ | (15,093,726 | ) | |||
Weighted average outstanding shares of common stock | 61,583,086 | 50,511,090 | |||||||
Dilutive effect of stock options and warrants | -- | -- | |||||||
Common stock and equivalents | 61,583,086 | 50,511,090 | |||||||
Net loss per share – Basic and diluted | $ | (0.02 | ) | $ | (0.30 | ) |
2_Equipment_Details
2. Equipment (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Equipment Details | ||
Test vehicles | $124,687 | $124,687 |
Other | 5,000 | |
Total | 129,687 | 124,687 |
Less: accumulated depreciation | -12,635 | -6,234 |
Equipment, net | $117,052 | $118,453 |
2_Equipment_Details_Narrative
2. Equipment (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Notes to Financial Statements | ||
Depreciation expense | $6,401 |
4_Debt_Details
4. Debt (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Debt Details | ||
Note payable b officer | $22,910 | $22,910 |
Note payable - UPT minority owner | 250,000 | |
Test vehicle financing | 90,167 | 94,401 |
Total | 363,077 | 117,311 |
Less: current portion | 290,500 | 40,235 |
Debt, long-term portion | $72,577 | $77,076 |
4_Debt_Details_1
4. Debt (Details 1) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Debt Details 1 | ||
2015 | $286,001 | |
2016 | 18,410 | |
2017 | 19,563 | |
2018 | 20,788 | |
2019 | 18,315 | |
Total | $363,077 | $117,311 |
6_Equity_Details_Narrative
6. Equity (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Equity Details Narrative | |
Common stock received | $215,000 |
7_Sharebased_payments_Details
7. Share-based payments (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-Based Payments Details | ||
Nonemployee common stock | $31,200 | $302,250 |
Nonemployee warrants | 4,462 | 6,077,735 |
Employee stock options | 327,000 | 7,950,000 |
Total share-based expense charged against income | $362,662 | $14,329,985 |
Impact on net loss per common share: Basic and diluted | ($0.01) | ($0.28) |
7_Sharebased_payments_Details_
7. Share-based payments (Details 1) | Mar. 31, 2015 |
Common stock shares issued | 650,000 |
Condition One [Member] | |
Common stock shares issued | 500,000 |
Condition Two [Member] | |
Common stock shares issued | 150,000 |
7_Sharebased_payments_Details_1
7. Share-based payments (Details 2) | 3 Months Ended |
Mar. 31, 2015 | |
Common stock warrants issued | 2,600,000 |
Vesting Condition One [Member] | |
Common stock warrants issued | 350,000 |
Category | Performance |
Vesting Condition Two [Member] | |
Common stock warrants issued | 1,530,000 |
Category | Performance |
Vesting Condition Three [Member] | |
Common stock warrants issued | 720,000 |
Category | Service |
7_Sharebased_payments_Details_2
7. Share-based payments (Details 3) (Nonemployee Common stock warrants - Service and performance conditions [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Nonemployee Common stock warrants - Service and performance conditions [Member] | |
Number of Warrants | |
Nonvested, Beginning | 2,880,000 |
Vested | -460,000 |
Nonvested, Ending | 2,420,000 |
Weighted-average Grant Date Fair Value | |
Nonvested, Beginning | $0.98 |
Vested | $0.99 |
Nonvested, Ending | $0.98 |
7_Sharebased_payments_Details_3
7. Share-based payments (Details 4) (Nonemployee Common stock warrants - Service and performance conditions [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Volatility | 184.00% |
Dividend yield | $0 |
Minimum [Member] | |
Risk-free interest rate | 0.90% |
Expected life (years) | 3 years |
Maximum [Member] | |
Risk-free interest rate | 1.40% |
Expected life (years) | 5 years |
7_Sharebased_payments_Details_4
7. Share-based payments (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Common Stock issued for services, Value | $31,200 | $302,250 | |
Common stock warrants under the service condition vested | 60,000 | ||
Recognized expense | 24,877 | ||
Investor relations agreement [Member] | |||
Issuance of common stock | 180,000 | ||
Recorded expense | 31,200 | ||
Financing advisory services [Member] | |||
Recognized expense | 200,379 | ||
Re-valued award | 179,964 | ||
Reduction in expense | $20,415 |
8_Net_Loss_per_Share_Details
8. Net Loss per Share (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Net Loss Per Share Details | ||
Net loss available for stockholders | ($1,278,436) | ($15,093,726) |
Weighted average outstanding shares of common stock | 61,583,086 | 50,511,090 |
Dilutive effect of stock options and warrants | ||
Common stock and equivalents | 61,583,086 | 50,511,090 |
Net loss per share - Basic and diluted | ($0.02) | ($0.30) |