Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 12, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | COOL TECHNOLOGIES, INC. | |
Entity Central Index Key | 1,399,352 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
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 | 81,821,628 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash | $ 222,253 | $ 10,882 |
Prepaid expenses | 43,545 | 95,175 |
Total current assets | 265,798 | 106,057 |
Intangible | 160,818 | 153,434 |
Equipment, net | 91,116 | 97,600 |
Total assets | 517,732 | 357,091 |
Current liabilities | ||
Accounts payable | 1,422,169 | 1,278,307 |
Accrued liabilities - related party | 639,687 | 591,870 |
Customer deposits - related party | 400,000 | 400,000 |
Accrued payroll taxes | 33,737 | 33,737 |
Debt, current portion | 827,230 | 697,903 |
Derivative liability | 809,654 | 356,554 |
Total current liabilities | 4,132,477 | 3,358,371 |
Debt, long-term portion, net of debt discount | 68,806 | 77,803 |
Total liabilities | $ 4,201,283 | $ 3,436,174 |
Commitments and contingencies (Note 5) | ||
Stockholders' equity (deficit): | ||
Preferred stock, $.001 par value; 15,000,000 shares authorized; 122 and 136 shares issued and outstanding at March 31, 2016 and December 31, 2015, Respectively | ||
Common stock, $.001 par value; 140,000,000 shares authorized; 68,076,150 and 66,600,367 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | $ 67,204 | $ 65,929 |
Additional paid-in capital | 37,626,589 | 36,038,551 |
Common stock issuable | 525,500 | 180,900 |
Common stock held in escrow | 8,441 | 8,441 |
Accumulated deficit | (41,879,046) | (39,344,245) |
Total deficit | (3,651,312) | (3,050,424) |
Noncontrolling interest in subsidiary | (32,239) | (28,659) |
Total stockholders' deficit | (3,683,551) | (3,079,083) |
Total liabilities and stockholders' equity | $ 517,732 | $ 357,091 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Stockholders' Equity (Deficit): | ||
Preferred stock par value | $ .001 | $ .001 |
Preferred stock shares authorized | 15,000,000 | 15,000,000 |
Preferred stock shares issued | 122 | 136 |
Preferred stock shares outstanding | 122 | 136 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 140,000,000 | 140,000,000 |
Common stock shares issued | 68,076,150 | 66,600,367 |
Common stock shares outstanding | 68,076,150 | 66,600,367 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Condensed Consolidated Statements Of Operations | ||
Revenue | ||
Cost of revenues | ||
Gross profit | ||
Operating expenses | ||
Payroll and related expenses | $ 220,231 | $ 214,925 |
Consulting | 1,212,890 | 130,423 |
Professional fees | 111,345 | 147,860 |
Research and development | 12,767 | 299,645 |
General and administrative | 463,027 | 489,277 |
Total operating expenses | 2,020,260 | 1,282,130 |
Operating loss | (2,020,260) | (1,282,130) |
Other income (expense): | ||
Interest expense, net | (371,243) | $ (1,958) |
Change in fair value of derivative liability | (146,878) | |
Net loss | (2,538,381) | $ (1,284,088) |
Less: Noncontrolling interest in net loss | (3,580) | (5,652) |
Net loss to shareholders | $ (2,534,801) | $ (1,278,436) |
Net loss per common share: Basic and diluted | $ (0.04) | $ (0.02) |
Weighted average common shares outstanding: Basic and diluted | 67,276,998 | 61,583,086 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating Activities: | ||
Net loss | $ (2,538,381) | $ (1,284,088) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock issued for services | 31,200 | |
Warrants issued for services | $ 1,115,246 | 4,462 |
Employee stock options | 327,000 | $ 327,000 |
Non-cash interest expense | 149,089 | |
Change in fair value of derivative liability | 146,878 | |
Amortization of debt discount | 201,343 | |
Depreciation expense | 6,484 | $ 6,401 |
Changes in operating assets and liabilities: | ||
Prepaid expenses | 51,630 | |
Accounts payable | 143,862 | $ 255,175 |
Accrued liabilities - related party | $ 47,817 | 79,504 |
Accrued payroll liabilities | 6,685 | |
Net cash used in operating activities | $ (349,032) | (573,661) |
Investing Activities: | ||
Intangible assets | $ (7,384) | (9,243) |
Equipment purchase | (5,000) | |
Net cash used in investing activities | $ (7,384) | (14,243) |
Financing Activities: | ||
Proceeds from sale of common stock | 400,000 | 225,000 |
Proceeds from debt | 173,800 | 250,000 |
Payments on debt | (6,013) | (4,234) |
Net cash provided by financing activities | 567,787 | 470,766 |
Net (decrease) increase in cash | 211,371 | (117,138) |
Cash, beginning of period | 10,882 | 171,871 |
Cash, end of period | 222,253 | 54,733 |
Cash paid for: Interest | $ 7,528 | $ 1,416 |
Cash paid for: Income taxes | ||
Non-cash transactions: | ||
Derivative liability offset by debt discount | $ 173,800 | |
Reduction of stock issuable by issuing common stock | 25,400 | $ 410,950 |
Debt and interest settled for common stock | $ 91,667 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Note 1 - Description of Business and Summary of Significant Accounting Policies | Description of Business Cool Technologies, Inc. and subsidiary, (we, us, our, the "Company" or "Cool Technologies") 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 Cool Technologies owns 5%. We were formerly known as Bibb Corporation, as Z3 Enterprises, and as HPEV Inc. On August 20, 2015, we changed our name to Cool Technologies, Inc. Basis of Presentation The accompanying condensed consolidated balance sheet as of December 31, 2015, 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, 2015. 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 $41,879,046 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 raise capital, generate revenue, achieve profitable operations and repay our obligations when they come due. We will have to obtain additional debt and / or equity financing; however, we cannot provide investors with assurance that we will be able to raise sufficient capital to fund our operations. 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 commercialization phases of our business plan: to license its thermal technologies and applications, including submersible dry-pit applications; and to license and sell mobile generation retrofit kits (our Ultimate Power Truck business) as well as retrofitted vehicles that incorporate our proprietary gearing system. There can be no assurance, however, that we will be successful in raising additional financing and accomplishing these objectives. Recently Issued Accounting Pronouncements Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2016-09 "Compensation Stock Compensation (Topic 718)" FASB ASU 2016-10 "Revenue from Contracts with Customers (Topic 606)" |
Customer deposits - Related par
Customer deposits - Related party | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Note 2 - 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. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Note 3 - Debt | Debt consists of the following: March 31, 2016 December 31, 2015 Notes payable -- original issue discount $ 400,000 $ 400,000 Convertible notes payable 485,500 365,350 Test vehicle financing 71,062 77,075 Note payable related party 22,910 22,910 Note payable UPT minority owner 250,000 250,000 1,229,472 1,115,335 Debt discount (333,436 ) (339,629 ) 896,036 775,706 Less: current portion (827,230 ) (697,903 ) $ 68,806 $ 77,803 Notes payable original issue discount In October 2015, we received $350,000 under two notes payable with an original issue discount of $50,000, in lieu of interest. The $400,000 principal balance was payable in full on March 31, 2016. In the event of default, the interest rate will be 18% per annum. Convertible notes payable September 2015 Convertible Note -- December 2015 Convertible Notes -- February 2016 Convertible Note Test Vehicle Financing 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. Note payable related party This note is non-interest bearing and is due on demand, payable to the Secretary of Cool Technologies. Note payable UPT minority owner Held by the 5% minority owner of UPT. The terms of the note have not been finalized. Future contractual maturities of debt are as follows: Year ending December 31, 2016 $ 1,066,158 2017 124,214 2018 20,789 2019 18,311 $ 1,229,472 |
Derivative Liability
Derivative Liability | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Note 4 - Derivative Liability | Under the terms of the convertible note agreements, we identified derivative instruments arising from embedded conversion features, as well as warrants issued with the December 2015 Convertible Note. The following summarizes the Black-Scholes assumptions used to estimate the fair value of the derivative liability at the dates of issuance and the revaluation dates: January 27, 2016 (1) February 10, 2016 (2) February 24, 2016 (3) March 31, 2016 Volatility 121 % 121 % 118 % 121 127 % Risk-free interest rate 0.5 % 0.4 % 0.7 % 0.3 0.8 % Expected life (years) 1.0 0.5 1.6 0.4 2.7 Dividend yield -- -- -- -- (1) Additional borrowing under the December 2015 Convertible Note. (2) Borrowing under the February 2016 Convertible Note (3) Partial conversion of the September 2015 Convertible Note Changes in the derivative liability were as follows: Amount December 31, 2015 $ 356,554 December 2015 Convertible Note additional borrowing 53,951 February 2016 Convertible Note 252,271 Conversion September 2015 Convertible Note (71,122 ) Change in fair value at March 31, 2016 218,000 March 31, 2016 $ 809,654 An estimated 4,209,487 number of shares were issuable if the conversion features and warrants had been exercised on March 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
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 condensed consolidated balance sheets as common stock held in escrow. Effective May 1, 2015, we executed a First Amendment to Settlement Agreement (the "Amendment") with Spirit Bear and the parties identified as the assignees of Spirit Bear who are signatories to the Amendment, which amends certain provisions of our original Settlement Agreement with Spirit Bear. In accordance with the terms of the Amendment, Jay Palmer, Carrie Dwyer and Donica Holt, the Spirit Bear holdover directors, tendered their resignation from the Board of Directors of the Company. Spirit Bear also agreed that it will no longer have any rights to appoint nominees to the Board of Directors. Pursuant to the Amendment, the Company agreed to file a registration statement on Form S-1 covering an aggregate of 14,028,385 shares of common stock, preferred stock and warrants on behalf of Spirit Bear and its assignees no later than July 15, 2015, which was filed with the SEC on July 15, 2015. A representative of Spirit Bear agreed that the obligation to register the shares on a Form S-1 need only include shares of common stock and shares of common stock issuable upon conversion of the Preferred Stock and exercise of the warrants held by Spirit Bear and its assignees. The Company agreed to issue replacement warrants for certain previously-issued warrants, which will be canceled in connection with the replacement issuance. Within 10 business days of June 1, 2015, the parties agreed to dismiss all of the pending litigation between and among them. On August 28, 2015, the parties filed a stipulation to dismiss the direct claims of the Company against Spirit Bear and of Spirit Bear against the Company in the Nevada Lawsuit. By order dated September 1, 2015, and filed September 2, 2015, the court ordered dismissal of all direct claims in the Nevada Lawsuit. Additionally, on February 20, 2015, the Court issued its preliminary approval to the derivative action settlement agreement (the "DASA'), which would lead to the ultimate dismissal of the derivative suit also filed by Spirit Bear in the same action. The Court has scheduled a fairness hearing for November 20, 2015, to consider giving its final approval to the DASA. No shareholder filed any objections to the DASA by April 30, 2015, which was the deadline established by the Court for filing objections. On October 22, 2015, however, Peak Finance, LLC ("Peak Finance") filed a Motion to Intervene in the action seeking, among other things, approval to file a new derivative Complaint in this matter. The Company has opposed this Motion. On August 31, 2015, the Company received notice of a summons in the matter styled Peak Finance, Derivatively on Behalf of Nominal Defendant, HPEV, Inc. v. Hassett, et al., No. 2:15-cv-01590-GMN-CWH, filed in the United States District Court for the District of Nevada (the "Peak Finance Claim"). Plaintiff Peak Finance, LLC ("Peak Finance") alleges that certain members of the Company's Board of Directors and officers caused a misleading proxy statement to issue and breached alleged fiduciary duties from and after June 18, 2013. Peak Finance further alleges that its claim is related to the Spirit Bear Lawsuit described above. The Company has not determined that there is any merit to the allegations, and has decided to submit the claims to an Independent Director Committee consisting of Directors Christopher McKee, Richard J. "Dick" Schul, and Donald Bowman for their review and consideration. Additionally, on September 28, 2015, the Company filed a motion to dismiss the initial Complaint filed by Peak Finance. On October 22, 2015, rather than oppose the motion to dismiss, Peak Finance filed an amended complaint in this case in addition to the Motion to Intervene in the pending Spirit Bear litigation set forth above. On November 9, 2015, the Company filed a new motion to dismiss the first amended complaint filed by Peak Finance on October 22, 2015. At the November 20, 2015, fairness hearing, the Court denied Peak Finance's Motion to Intervene. However, the Court did allow Peak Finance to formally argue its objections to the DASA. The Court ordered additional briefing on certain issues, which has not been completed. The Court further ordered another hearing to consider the DASA on April 1, 2016. On April 1, 2016, Peak Finance and the Company advised the Court that they had agreed in principle to a settlement that would include withdrawal of Peak Finance's objection to the DASA. On April 20, 2016, the parties filed a Stipulation and Proposed Order for Withdrawal of Objection to DASA, which was granted by the Court on April 21, 2016. On May 3, 2016, the Court issued an Order, which fully and finally approved the DASA and dismissed the Peak Finance and the Spirit Bear cases, with prejudice. On May 17, 2016, the Company filed a document to show cause as to the effect of the Stipulation and Proposed Order Regarding Settlement on the pending Motion to Dismiss Amended Complaint. Also on May 17, 2016, Peak Finance and the Company filed a Stipulation and Proposed Order to Modify Stay of Proceedings so that the stay issued on January 6, 2016 could be modified in order to permit the Court to consider the Stipulation and Proposed Order Regarding Settlement and for the Court and all parties to take all necessary actions to seek final approval of a settlement prior to the Court ruling on the pending Motion to Dismiss. From time to time, we may be a party to other legal proceedings. Management currently believes that the ultimate resolution of these other matters, if any, 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, 2016 | |
Notes to Financial Statements | |
Note 6 - Equity | Common Stock On August 19, 2015, the stockholders voted to increase the number of authorized shares of common stock from 100,000,000 shares to 140,000,000 shares. Common stock issuable on the condensed consolidated balance sheet represents common stock to be issued for either cash received or services performed. As of March 31, 2016 and December 31, 2015, the number of shares of common stock to be issued was 2,773,745 and 701,018 shares, respectively. Common stock warrants issued with the sale of our common stock When we sell shares of our common stock the buyer also typically receives fully-vested common stock warrants with a maximum contractual term of 3-5 years. A summary of common stock warrants issued with the sale of our common stock as of March 31, 2016, and changes during the period then ended is presented below: Number of Warrants Weighted-average Exercise Price Weighted-average Remaining Life (Years) Aggregate Intrinsic Value Outstanding, December 31, 2015 20,726,707 $ 0.49 Granted 3,987,207 0.53 Forfeited or cancelled (3,840,274 ) 0.57 Outstanding, March 31, 2016 20,873,640 0.49 1.9 $ 332,372 Exercisable, March 31, 2016 20,873,640 0.49 1.9 $ 332,372 Included in the warrants granted and cancelled above are 3,729,164 warrants for which the life was extended by one year, for which we recorded expense of $660,000. |
Share-based payments
Share-based payments | 3 Months Ended |
Mar. 31, 2016 | |
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, 2016 2015 Nonemployee common stock $ -- $ 31,200 Nonemployee warrants fully-vested upon issuance 445,390 -- Nonemployee warrants service and performance conditions 9,856 4,462 Employee stock options market price-based 327,000 327,000 Total share-based expense charged against income $ 782,246 $ 362,662 Impact on net loss per common share: Basic and diluted $ (0.01 ) $ (0.01 ) 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: Condition Number of Shares 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, 2016, 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. We recognized expense of $31,200, during the quarter ended March 31, 2015, for the issuance of 60,000 shares. Other During the quarters ended March 31, 2016 and 2015, we issued no other shares of common stock in exchange for services. Nonemployee common stock warrants -- Fully-vested upon issuance Financing Advisory Services In January 2016, we modified the terms of previously issued warrants and issued additional warrants to a company that provides us with financial consulting services. We lowered the exercise price on 2,533,000 warrants to $0.30 per share for warrants that previously had exercise prices ranging from $0.56 to $2.50 per share. As a result of modifying the previously issued warrants, we recognized expense of $64,000. We also issued 1,266,503 additional warrants with an exercise price of $0.30 per share that expire in five years, for which we recognized expense of $246,500. The following summarizes the Black-Scholes assumptions used to estimate the fair value of these common stock warrants: Replacement Warrants Additional Warrants Volatility 133 182 % 204 % Risk-free interest rate 1.1 1.3 % 1.4 % Expected life (years) 3.0 4.3 5.0 Dividend yield -- -- Board of Advisors In February 2016, we issued three year warrants to purchase 400,000 shares of common stock at an exercise price of $0.27 per share and 200,000 shares of common stock at an exercise price of $0.31 per share, to five individuals serving on our board of advisors. We recognized $134,890 of expense for these warrants. The following summarizes the Black-Scholes assumptions used to estimate the fair value of these common stock warrants: Volatility 127 % Risk-free interest rate 0.9 % Expected life (years) 3.0 Dividend yield -- 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 Performance 1,530,000 60,000 warrants for every three months of completed service managing UPT Service 720,000 Total 2,600,000 Vested March 31, 2016 (420,000 ) Nonvested March 31, 2016 2,180,000 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, 2016, and since the date of the agreement, we have not deemed it probable that the performance conditions will be met, so no expense was recognized and no common stock warrants vested. During the three months ended March 31, 2016 and 2015, 60,000 of the common stock warrants under the service condition vested with the passage of time and we recognized expense of $9,856 and $24,877, respectively. 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. Employee stock options Fully-vested We granted no additional fully-vested options during the three months ended March 31, 2016. Employee stock options Market-based We granted no additional options that vest upon the achievement of certain stock prices during the three months ended March 31, 2016. No additional non-vested market-based options vested during the quarter ended March 31, 2016. |
Net Loss per Share
Net Loss per Share | 3 Months Ended |
Mar. 31, 2016 | |
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, 2016 2015 Net loss available for stockholders $ (2,534,801 ) $ (1,278,436 ) Weighted average outstanding shares of common stock 67,276,998 61,583,086 Dilutive effect of stock options and warrants -- -- Common stock and equivalents 67,276,998 61,583,086 Net loss per share Basic and diluted $ (0.04 ) $ (0.02 ) Outstanding stock options and common stock warrants are considered anti-dilutive because we are in a net loss position. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Note 9 - Subsequent Events | Subsequent to March 31, 2016, $114,026 under the September 2015 Convertible Note were converted in exchange for 1,021,429 shares of our common stock. |
Description of Business and S15
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Description Of Business And Summary Of Significant Accounting Policies Policies | |
Description of Business | Cool Technologies, Inc. and subsidiary, (we, us, our, the "Company" or "Cool Technologies") 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 Cool Technologies owns 5%. We were formerly known as Bibb Corporation, as Z3 Enterprises, and as HPEV Inc. On August 20, 2015, we changed our name to Cool Technologies, Inc. |
Basis of Presentation | The accompanying condensed consolidated balance sheet as of December 31, 2015, 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, 2015. |
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 $41,879,046 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 raise capital, generate revenue, achieve profitable operations and repay our obligations when they come due. We will have to obtain additional debt and / or equity financing; however, we cannot provide investors with assurance that we will be able to raise sufficient capital to fund our operations. 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 commercialization phases of our business plan: to license its thermal technologies and applications, including submersible dry-pit applications; and to license and sell mobile generation retrofit kits (our Ultimate Power Truck business) as well as retrofitted vehicles that incorporate our proprietary gearing system. There can be no assurance, however, that we will be successful in raising additional financing and accomplishing these objectives. |
Recently Issued Accounting Pronouncements | Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2016-09 "Compensation Stock Compensation (Topic 718)" FASB ASU 2016-10 "Revenue from Contracts with Customers (Topic 606)" |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Tables | |
Summary of Debt | Debt consists of the following: March 31, 2016 December 31, 2015 Notes payable -- original issue discount $ 400,000 $ 400,000 Convertible notes payable 485,500 365,350 Test vehicle financing 71,062 77,075 Note payable related party 22,910 22,910 Note payable UPT minority owner 250,000 250,000 1,229,472 1,115,335 Debt discount (333,436 ) (339,629 ) 896,036 775,706 Less: current portion (827,230 ) (697,903 ) $ 68,806 $ 77,803 |
Future contractual maturities of debt | Future contractual maturities of debt are as follows: Year ending December 31, 2016 $ 1,066,158 2017 124,214 2018 20,789 2019 18,311 $ 1,229,472 |
Derivative Liability (Tables)
Derivative Liability (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Liability Tables | |
Fair value of the derivative liability | The following summarizes the Black-Scholes assumptions used to estimate the fair value of the derivative liability at the dates of issuance and the revaluation dates: January 27, 2016 (1) February 10, 2016 (2) February 24, 2016 (3) March 31, 2016 Volatility 121 % 121 % 118 % 121 127 % Risk-free interest rate 0.5 % 0.4 % 0.7 % 0.3 0.8 % Expected life (years) 1.0 0.5 1.6 0.4 2.7 Dividend yield -- -- -- -- (1) Additional borrowing under the December 2015 Convertible Note. (2) Borrowing under the February 2016 Convertible Note (3) Partial conversion of the September 2015 Convertible Note |
Changes in the derivative liability | Changes in the derivative liability were as follows: Amount December 31, 2015 $ 356,554 December 2015 Convertible Note additional borrowing 53,951 February 2016 Convertible Note 252,271 Conversion September 2015 Convertible Note (71,122 ) Change in fair value at March 31, 2016 218,000 March 31, 2016 $ 809,654 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity Tables | |
A summary of common stock warrants issued | A summary of common stock warrants issued with the sale of our common stock as of March 31, 2016, and changes during the period then ended is presented below: Number of Warrants Weighted-average Exercise Price Weighted-average Remaining Life (Years) Aggregate Intrinsic Value Outstanding, December 31, 2015 20,726,707 $ 0.49 Granted 3,987,207 0.53 Forfeited or cancelled (3,840,274 ) 0.57 Outstanding, March 31, 2016 20,873,640 0.49 1.9 $ 332,372 Exercisable, March 31, 2016 20,873,640 0.49 1.9 $ 332,372 |
Share-based payments (Tables)
Share-based payments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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, 2016 2015 Nonemployee common stock $ -- $ 31,200 Nonemployee warrants fully-vested upon issuance 445,390 -- Nonemployee warrants service and performance conditions 9,856 4,462 Employee stock options market price-based 327,000 327,000 Total share-based expense charged against income $ 782,246 $ 362,662 Impact on net loss per common share: Basic and diluted $ (0.01 ) $ (0.01 ) |
Fair value of each option award | The following summarizes the Black-Scholes assumptions used to estimate the fair value of these common stock warrants: Volatility 127 % Risk-free interest rate 0.9 % Expected life (years) 3.0 Dividend yield -- |
Nonemployee Common stock [Member] | |
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: Condition Number of Shares 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 -- Fully-vested upon issuance [Member] | |
Fair value of each option award | The following summarizes the Black-Scholes assumptions used to estimate the fair value of these common stock warrants: Replacement Warrants Additional Warrants Volatility 133 182 % 204 % Risk-free interest rate 1.1 1.3 % 1.4 % Expected life (years) 3.0 4.3 5.0 Dividend yield -- -- |
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 Performance 1,530,000 60,000 warrants for every three months of completed service managing UPT Service 720,000 Total 2,600,000 Vested March 31, 2016 (420,000 ) Nonvested March 31, 2016 2,180,000 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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, 2016 2015 Net loss available for stockholders $ (2,534,801 ) $ (1,278,436 ) Weighted average outstanding shares of common stock 67,276,998 61,583,086 Dilutive effect of stock options and warrants -- -- Common stock and equivalents 67,276,998 61,583,086 Net loss per share Basic and diluted $ (0.04 ) $ (0.02 ) |
3. Debt (Details)
3. Debt (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Details | ||
Notes payable - original issue discount | $ 400,000 | $ 400,000 |
Convertible notes payable | 485,500 | 365,350 |
Test vehicle financing | 71,062 | 77,075 |
Note payable - related party | 22,910 | 22,910 |
Note payable - UPT minority owner | 250,000 | 250,000 |
Total | 1,229,472 | 1,115,335 |
Debt discount | (333,436) | (339,629) |
Total | 896,036 | 775,706 |
Less: current portion | (827,230) | (697,903) |
Debt, long-term portion | $ 68,806 | $ 77,803 |
3. Debt (Details 1)
3. Debt (Details 1) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Details 1 | ||
2,016 | $ 1,066,158 | |
2,017 | 124,214 | |
2,018 | 20,789 | |
2,019 | 18,311 | |
Total | $ 1,229,472 | $ 1,115,335 |
3. Debt (Details Narrative)
3. Debt (Details Narrative) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Details Narrative | ||
Notes payable - original issue discount | $ 400,000 | $ 400,000 |
4. Derivative Liability (Detail
4. Derivative Liability (Details) | 3 Months Ended | |
Mar. 31, 2016 | ||
Minimum [Member] | ||
Volatility | 121.00% | |
Risk-free interest rate | 0.30% | |
Expected life (years) | 4 months 24 days | |
Dividend yield | ||
Maximum [Member] | ||
Volatility | 127.00% | |
Risk-free interest rate | 0.80% | |
Expected life (years) | 2 years 8 months 12 days | |
Dividend yield | ||
January 27, 2016 [Member] | ||
Volatility | 121.00% | [1] |
Risk-free interest rate | 0.50% | [1] |
Expected life (years) | 1 year | [1] |
Dividend yield | [1] | |
February 10, 2016 [Member] | ||
Volatility | 121.00% | [2] |
Risk-free interest rate | 0.40% | [2] |
Expected life (years) | 6 months | [2] |
Dividend yield | [2] | |
February 24, 2016 [Member] | ||
Volatility | 118.00% | [3] |
Risk-free interest rate | 0.70% | [3] |
Expected life (years) | 1 year 7 months 6 days | [3] |
Dividend yield | [3] | |
[1] | (1) Additional borrowing under the December 2015 Convertible Note. | |
[2] | (2) Borrowing under the February 2016 Convertible Note. | |
[3] | (3) Partial conversion of the September 2015 Convertible Note. |
4. Derivative Liability (Deta25
4. Derivative Liability (Details 1) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Derivative Liability Details 1 | |
Derivative liability, Beginning balance | $ 356,554 |
December 2015 Convertible Note - additional borrowing | 53,951 |
February 2016 Convertible Note | 252,271 |
Conversion - September 2015 Convertible Note | (71,122) |
Change in fair value at March 31, 2016 | 218,000 |
Derivative liability, Ending balance | $ 809,654 |
4. Derivative Liability (Deta26
4. Derivative Liability (Details Narrative) | Mar. 31, 2016USD ($) |
Derivative Liability Details Narrative | |
Number of shares issuable for conversion features and warrants exercised | $ 4,209,487 |
6. Equity (Details)
6. Equity (Details) - Warrants [Member] | 3 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Number of Warrants | |
Outstanding, Beginning | shares | 20,726,707 |
Granted | shares | 3,987,207 |
Forfeited or cancelled | shares | (3,840,274) |
Outstanding, Ending | shares | 20,873,640 |
Exercisable, Ending | shares | 20,873,640 |
Weighted Average Exercise Price | |
Outstanding, Beginning | $ / shares | $ 0.49 |
Granted | $ / shares | 0.53 |
Exercised | $ / shares | 0.57 |
Forfeited or expired | $ / shares | 0.49 |
Outstanding, Ending | $ / shares | $ 0.49 |
Weighted-average Remaining Life (Years) | |
Outstanding | 1 year 10 months 24 days |
Exercisable | 1 year 10 months 24 days |
Aggregate Intrinsic Value | |
Outstanding, Ending | $ | $ 332,372 |
Exercisable, Ending | $ | $ 332,372 |
6. Equity (Details Narrative)
6. Equity (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Equity Details Narrative | ||
Common stock to be issued, amount | $ 2,773,745 | $ 701,018 |
7. Share-based payments (Detail
7. Share-based payments (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Payments Details | ||
Nonemployee common stock | $ 31,200 | |
Nonemployee warrants - fully-vested upon issuance | $ 445,390 | |
Nonemployee warrants - service and performance conditions | 9,856 | $ 4,462 |
Employee stock options - market price-based | 327,000 | 327,000 |
Total share-based expense charged against income | $ 782,246 | $ 362,662 |
Impact on net loss per common share: Basic and diluted | $ (0.01) | $ (0.01) |
7. Share-based payments (Deta30
7. Share-based payments (Details 1) | Mar. 31, 2016shares |
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. Share-based payments (Deta31
7. Share-based payments (Details 2) | 3 Months Ended |
Mar. 31, 2016 | |
Volatility | 127.00% |
Risk-free interest rate | 0.90% |
Expected life (years) | 3 years |
Dividend yield | 0.00% |
Replacement Warrants [Member] | Minimum [Member] | |
Volatility | 133.00% |
Risk-free interest rate | 1.10% |
Expected life (years) | 3 years |
Dividend yield | 0.00% |
Replacement Warrants [Member] | Maximum [Member] | |
Volatility | 182.00% |
Risk-free interest rate | 1.30% |
Expected life (years) | 4 years 3 months 18 days |
Dividend yield | 0.00% |
Additional Warrants [Member] | |
Volatility | 204.00% |
Risk-free interest rate | 1.40% |
Expected life (years) | 5 years |
Dividend yield | 0.00% |
7. Share-based payments (Deta32
7. Share-based payments (Details 3) | 3 Months Ended |
Mar. 31, 2016 | |
Share-based Payments Details | |
Volatility | 127.00% |
Risk-free interest rate | 0.90% |
Expected life (years) | 3 years |
Dividend yield | 0.00% |
7. Share-based payments (Deta33
7. Share-based payments (Details 4) | 3 Months Ended |
Mar. 31, 2016shares | |
Common stock warrants issued | 2,600,000 |
Vested - March 31, 2016 | (420,000) |
Nonvested - March 31, 2016 | 2,180,000 |
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. Share-based payments (Deta34
7. Share-based payments (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Common stock warrants under the service condition vested | 60,000 | 60,000 |
Recognized expense | $ 9,856 | $ 24,877 |
Investor relations agreement [Member] | ||
Issuance of common stock | 60,000 | |
Recorded expense | $ 31,200 |
8. Net Loss per Share (Details)
8. Net Loss per Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net Loss Per Share Details | ||
Net loss available for stockholders | $ (2,534,801) | $ (1,278,436) |
Weighted average outstanding shares of common stock | 67,276,998 | 61,583,086 |
Dilutive effect of stock options and warrants | ||
Common stock and equivalents | 67,276,998 | 61,583,086 |
Net loss per share - Basic and diluted | $ (0.04) | $ (0.02) |