Attached files
file | filename |
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EX-32 - Li-ion Motors Corp. | v200725_ex32.htm |
EX-31 - Li-ion Motors Corp. | v200725_ex31.htm |
EX-10.35 - Li-ion Motors Corp. | v200725_ex10-35.htm |
EX-10.33 - Li-ion Motors Corp. | v200725_ex10-33.htm |
EX-10.34 - Li-ion Motors Corp. | v200725_ex10-34.htm |
EX-10.36 - Li-ion Motors Corp. | v200725_ex10-36.htm |
EX-10.37 - Li-ion Motors Corp. | v200725_ex10-37.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
|
|
x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For
the Fiscal Year Ended July 31, 2010
|
|
or
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For
the transition period from
to
|
Commission
file number 000-33391
(Name of
Registrant as Specified in Its Charter)
Nevada
(State
or Other Jurisdiction
of
Incorporation or Organization)
|
88-0490890
(I.R.S.
Employer
Identification
No.)
|
|
4894
Lone Mountain #168, Las Vegas, Nevada
(Address
of Principal Executive Offices)
|
89130
(Zip
Code)
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(702) 425-7376
(Issuer’s
Telephone Number, Including Area
Code)
|
Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, Par value $0.01 per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. x No
Indicate
by checkmark if the registrant is not required to file reports to Section 13 or
15(d)Of the Act. ¨ Yes x No
Indicate
by check mark whether the issuer: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. x Yes ¨ No
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405
of this chapter) is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). o Yes x No
The
aggregate market value of voting and non-voting common equity held by
non-affiliates as of January 31, 2010 was $9,047,301, based on the average bid
and asked prices on the OTC Bulletin Board on that date.
On
October 27, 2010, there were 30,047,301 shares of common stock
outstanding.
Table
of Contents
Item
1. Business
|
3 | ||
Item
1A. Risk Factors
|
7 | ||
Item
1B. Unresolved Staff Comments
|
8 | ||
Item
2. Properties
|
8 | ||
Item
3. Legal Proceedings
|
8 | ||
Item
4. [Removed and Reserved]
|
9 | ||
Item
5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
|
9 | ||
Item
6. Selected Financial Data
|
11 | ||
Item
7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
|
11 | ||
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
|
15 | ||
Item
8. Financial Statements and Supplementary Data
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15 | ||
Item
9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
|
36 | ||
Item
9A (T). Controls and Procedures
|
36 | ||
Item
9B. Other Information
|
37 | ||
Item
10. Directors, Executive Officers and Corporate Governance
|
37 | ||
Item
11. Executive Compensation
|
11 | ||
Item
12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
39 | ||
Item
13. Certain Relationships and Related Transactions, and Director
Independence
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40 | ||
Item
14. Principal Accountant Fees and Services
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41 | ||
Item
15. Exhibits and Financial Statement Schedules
|
42 |
2
PART
I
NOTE
REGARDING FORWARD LOOKING STATEMENTS
CAUTIONARY
STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This
Annual Report contains historical information as well as forward-looking
statements. Statements looking forward in time are included in this Annual
Report pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve known and unknown
risks and uncertainties that may cause our actual results in future periods
to be materially different from any future performance suggested herein. We
wish to caution readers that in addition to the important factors described
elsewhere in this Form 10-K, the following forward looking statements,
among others, sometimes have affected, and in the future could affect, our
actual results and could cause our actual consolidated results during 2010,
and beyond, to differ materially from those expressed in any
forward-looking statements made by or on our behalf.
Item
1. Business
Company
History
Li-ion
Motors Corp. (“we, “us”, the “Company” or “Li-ion”) was incorporated under the
laws of the State of Nevada in April 2000. Since our incorporation, we have
evaluated various business opportunities; however, after evaluation of several
different lines of business, we determined to focus our efforts on the
development and marketing of electric powered vehicles and
products.
We changed our name from Whistler
Investments, Inc. to Hybrid Technologies, Inc. on March 9, 2005 to reflect our
corporate focus on electric products, on January 22, 2009, we changed our name
to EV Innovations, Inc. in order to clarify that our vehicles are fully
electric, not hybrids. Effective February 1, 2010, we changed our name to Li-ion
Motors Corp, to distinguish that our motors run on lithium ion
batteries.
Recent
Developments
In 2008 Progressive Casualty Insurance
Company announced a $10,000,000 automotive X Prize for innovative,
production–capable cars that have an equivalent of 100 miles per gallon (mpg)
using eco-friendly means of propulsion. Li-ion entered and won in the
side-by-side alternative fuel class. Li-ion staff developed
and designed the Wave II car for the competition, using our lithium-ion battery
packs. The competition opened in January 2010, with the Detroit Auto Show, where
111 teams registered. Qualifying and shakedown stages were held in April, May
and June at the Michigan Speedway. Technical inspections were performed to
ensure vehicles were safe and conformed to specifications that were submitted at
the time of entry. Vehicles were required to achieve 100 miles per gallon
equivalent (MPGe) with less than 200g/mile CO2 emissions to continue to the
finals. Team Li-ion had 182.3 MPGe with 0.74 energy consumed and greenhouse
emissions of 125. The event moved on to the on-road range, which requires the
car to drive 100 miles without recharging. Li-ion’s Wave II finished first with
a .17 edge over the second place vehicle. Dynamic safety dealt with
acceleration, braking and accident avoidance. Final validation was
conducted at Argonne labs in Chicago to verify track results. The
announcement of the winners took place in Washington, D.C. on September 16,
2010. On October 27, 2010, we were paid the $2,500,000 X Prize for our class in
the competition. We look forward to marketing our Wave and Inizio electric
vehicles, and we believe that our technology was proven out at the X-Prize
competition.
Liquidity
and Capital Resources
As of
July 31, 2010, we had cash on hand of $2,113 and our liabilities totaled
$7,960,959. For the year ended July 31, 2010, we incurred a net loss from
operations of $3,721,230. On July 31, 2010, we had a working capital deficit of
$1,836,457 and a stockholders' deficit of $5,918,907.
On
October 27, 2010, we received the $2,500,000 in funds for the X Prize
award. We will need additional capital to continue development and
marketing of our electric vehicles, particularly given the number of companies
competing in this sector and the fact that many of the larger car manufacturers
are developing and marketing electric and hybrid vehicles.
We had
30,047,301 shares of common stock issued and outstanding as of October 28, 2010.
Our common stock is traded on the OTC Bulletin Board.
3
General
We are an
early stage technology company. We are developing and marketing electric powered
vehicles and products.
Our
Electric Battery Pack and Vehicle Technology
We
commenced marketing conversions of four-wheel vehicles in 2007 and 2008. Then in
2009 we began to design and manufacture new and innovative autos of our own
design.
In our
Mooresville, North Carolina facility we converted and tested vehicles based
on Chrysler PT Cruiser, Mini Cooper, Pontiac Vibe, Toyota Yaris and the
Mercedes’ Smart car. We replaced the gasoline power systems with all electric
lithium battery power systems and battery management systems. We have
developed a rapid charge system that reduces charge time by approximately 65%;
it is currently being used and tested.
Our
Mooresville facility consists of approximately 40,000 square feet of space.
Currently we use approximately 20,000 square feet for conversion, production,
manufacturing and design. We also have a battery lab that is leased to
Superlattice Power, Inc. (“Superlattice”) of approximately 5,000 square feet.
The remaining square footage is used for offices and storage.
The
Battery Technology We Use
In
electric vehicles the battery pack performs the same function as the gas tank in
a conventional vehicle: it stores energy needed to operate the vehicle. We use
battery packs created in-house from Kokam cells in our converted vehicles. We
anticipate using cells created by Superlattice in
the future.
License
Agreements
We
entered into a License Agreement (“Superlattice License Agreement”) with
Superlattice in April 2008, providing for our license to Superlattice of our
patent applications and technologies for rechargeable lithium ion batteries for
hybrid vehicles and other applications (“Licensed Products”). Under the
Superlattice License Agreement, we have the right to purchase our requirements
of lithium ion batteries from Superlattice, and our requirements of lithium ion
batteries shall be supplied by Superlattice in preference to, and on a priority
basis as compared with, supply and delivery arrangements in effect for other
customers of Superlattice. Our cost for lithium ion batteries purchased from
Superlattice shall be Superlattice’s actual manufacturing costs for such
batteries for the fiscal quarter of Superlattice in which our purchase takes
place. On May 25, 2010, the Superlattice License Agreement was amended to
reflect Superlattice’s territory would be the United States, U.S. possessions
and territories only and the Company can license other companies in other parts
of the world.
Superlattice agreed to invest a minimum
of $1,500,000 in 2008 and 2009 in development of the technology for the Licensed
Products. In the initial year under the License Agreement, Superlattice invested
$264,043 in the development of technology, and therefore is not in compliance
with its obligations under this covenant of the Superlattice License Agreement.
We have advised Superlattice, that we will not give notice of default against
Superlattice for its failure to comply with this covenant for the term of the
License Agreement.
On May 25, 2010 the Superlattice
License Agreement was amended to limiting the license granted to Superlattice to
only the United States, permitting Li-ion to grant other licenses to companies
in other parts of the world.
Effective May 28, 2010, we entered into
a License Agreement (the “LEVC License Agreement”) with Lithium Electric Vehicle
Corp. (“LEVC”) providing for our license to LEVC of certain of our patent
applications and technologies for electric vehicles and other applications. The
purpose of the license is to expand sales of our current line of products by the
manufacture and sale of such products in Canada, which is LEVC’s exclusive
territory under the License Agreement.
Under the LEVC License Agreement, LEVC
has agreed, in consideration of the grant of the license, to pay us $1,000,000,
of which $666,667 has been paid, plus an amount equal to the independent
valuation of the license under the LEVC License Agreement, less the $1,000,000
payment. The payment of the excess of the valuation amount over the
$1,000,000 payment would be made by way of a convertible debenture or other
securities. Additionally, LEVC, as licensee, would pay an annual fee of
$500,000, commencing on the second anniversary of the date of the LEVC License
Agreement, and a royalty as determined in the independent valuation report. The
initial term of the license is ten years.
4
Electric
Motors
We use a
variety of electric motors in our converted vehicles, therefore, we are not
reliant on any single manufacturer of electric motors. There are a large number
of domestic and foreign manufacturers of electric motors, and we anticipate the
motors with the specifications we require will be available at reasonable
commercial prices from a number of these sources.
We
believe that an important characteristic of our technology is the lithium
battery power source, which is more efficient and powerful than other battery
power sources. Vehicles utilizing this technology have the ability to travel far
greater distances, can recharge in less time and also benefit from weight
reduction, as compared with vehicles using other battery powered systems. One of
the major historic hurdles facing electric vehicle manufacturers is that most
power sources do not allow the vehicle to travel more than 100 miles before
needing to be recharged. We believe that we can produce electric powered
vehicles with a travel range equal to or greater than 200 miles.
A
significant difference between electric vehicles and gasoline-powered vehicles
is the number of moving parts. The electric vehicle motor has one moving part,
the shaft, which is very reliable and requires little or no maintenance, thus
reducing repair costs. Whereas the gasoline-powered vehicle’s motor has numerous
moving parts, requiring a wide range of maintenance. The controller and charger
are electronic devices with no moving parts, and they require little or no
maintenance. Electric vehicle batteries are sealed and maintenance free,
However, the life of these batteries is limited, and batteries will require
periodic replacement. New batteries are being developed that will not only
extend the range of electric vehicles, but will also extend the life of the
battery pack which may eliminate the need to replace the battery pack during the
life of the vehicle.
Products
Under Development
We have
products under development in the following categories.
Vehicles
Li-ion has designed from the ground up
and produced the Inizio a luxurious sports car that we expect will achieve
speeds up to 200 miles per hour with acceleration from 0 to 60 in 5 seconds and
a range of up to 250 miles before recharging.
The Company has also designed and
produced the Wave as a family car. The Wave will be available in both two and
four door models. The Wave has been aerodynamically designed to reach speed up
to 80 miles per hour with acceleration from zero to sixty in twelve seconds.
Both these innovative vehicles manufactured by Li-ion Motors have no
emissions.
Commercial
Initiatives
On March
9, 2009 the State of North Carolina issued a manufacturing license to the
Company, and we now are manufacturing our own original design vehicles with
Vehicle Identification Number’s (“VIN”), while we continue to convert other
vehicles.
Since February 2004, the LiVTM series
electric vehicle has been tested and is under review by a number of government
agencies. The testing of the LiVTM series
vehicles by NASA, Arcadis, a contractor to the U.S. Environmental Protection
Administration, NYC Taxi Commission, and US Paratransit is completed. The
LiVTM WISE
is listed in the catalogue of the Unites States General Services Administration,
and these vehicles are available for purchase by multiple government agencies.
The target market for the LiVTM WISE
is federal government offices, utility companies, defense organizations and
fleet operators. Li-Ion worked with Zero Truck- USA for commercialization
of lithium ion powered heavy duty truck. We now offer our own, “Wave” two
and four door electric vehicles and the “Inizio” super cars to the US market.
The “Wave” electric vehicle is targeted at the commuter environment, and the
“Inizio” super sport car targets the high performance car market. We anticipate
that the “Inizio” and “Wave” will be the front line vehicles for
us.
We have
signed a Space Act agreement with NASA and several of our electric vehicles are
being driven daily by NASA at the Kennedy Space Center in
Florida.
5
Competition
The discussion below identifies some of
our principal competitors in the electric vehicle area, and is by no means a
comprehensive discussion of the companies competing or planning to compete in
this area.
The Automotive X-prize drew many
companies into the challenge of designing electric vehicles. Aptera, RaceAbout,
Project TW4XP, Edision2, OptaMotive all entered that competition, and they
anticipate producing electric vehicles.
ZAP Alias is a
100% plug-in electric car designed in a three-wheeled configuration, two wheels
in front, one in the rear. ZAP has sold a three-wheeled city-car and truck
called the Xebra since 2006 and has one of the only electric vehicle
distribution and service dealer networks in existence. Currently, ZAP has over
60 dealers throughout the USA as well as a number of international distribution
points, including South America and The Middle East.
Tata Motors is India's
largest automobile company, India’s leader in commercial vehicles and among the
top three in passenger vehicles. Tata Motors plans to develop cars that are more
fuel efficient, cleaner, with minimum impact to the environment.
General Motors’
Chevrolet division is developing its model named “Volt”, an electric car, with a
scheduled launch in the 2011 model year.
The Lightning GT is a
battery powered sports car manufactured by the United Kingdom company British
Lightning Car Company that is scheduled to begin deliveries in 2012. The
expected price is about $200,000.
Tesla Motors was founded in
2003. The TESLA Roadster is their first production car, capable of a
range of 200 miles with a top speed of 135 mph. It began sales in early
2008.
The Nissan Leaf
has planned sales for December 2010.
Employees
As of the
date of this report, we have 30 employees, including our President and CEO,
Stacey Fling, with her assistants and accounting staff at the corporate office
in Las Vegas, Nevada.
Research
and Development Expenditures
We
incurred research and development expenditures of $1,264,420 in our fiscal year
ended July 31, 2010, and $1,296,281 in our fiscal year ended July 31,
2009.
Patents
and Trademarks
We have filed three utility
patents, (non-provisional); each application claims the benefit of
the provisional filing date of July 1, 2009.
1. Thermal Management System
for Lithium Batteries - Application No: 12829369
It has been observed that lithium ion
batteries work efficiently and provide the highest mileage at certain
predetermined temperatures. Below optimum temperature, efficiency drops
off drastically. For example if an electric vehicle can run 100 miles at
its battery’s optimum operational temperature, at zero or subzero
temperatures the vehicle’s mileage would drop by approximately forty
percent. To avoid this, a heating system has been introduced to
keep the battery temperature at a certain point to achieve the target mileage
while driving during the winter seasons which reach zero or subzero
temperatures. The lithium ion battery is also not allowed to charge at zero,
subzero or, or below temperatures for safety issues.
2. Rechargeable Battery
Cathode Material - Application No.
12829355
A novel cathode material for a
rechargeable battery.
6
3. Charging Algorithm for
Lithium Batteries - Application No. 12829362
There are two major charging procedures
for charging lithium polymer batteries. One method is to charge at a
constant current. When a target voltage is reached the current is kept
constant until the current which normally decreases, rises to a certain
value. Another method of charging is step charging with a constant
current. In this method, the current is stopped at time intervals until
the target voltage is reached. It has been observed that lithium ion
batteries are very sensitive to charge rates, temperatures, thermodynamics and
kinetics of all components, electrodes and battery chemistry. A novel
method reveals a specific algorithm to efficiently charge lithium batteries by
adjusting battery voltage and current output to match the individual chemistry
of lithium batteries.
The
Company has also filed two provisional patents related to our battery management
system and reverse battery management.
Item
1A. Risk Factors
You
should be particularly aware of the inherent risks associated with our
business plan. These risks include but are not limited to:
We
are continuing to incur substantial losses from
our operations.
We have
had minimal revenues from joint ventures and sales of our products. We have
not signed any definitive joint venture agreements to commercialize any of our
products. As of July 31, 2010, we had cash on hand of $2,113. At that same date
our liabilities totaled $7,960,959. For the year ended July 31, 2010, we
incurred a net loss from continuing operations of $3,721,230. On July 31, 2010,
we had a working capital deficit of $1,836,457 and a stockholders' deficit of
$5,918,907.
We expect
that we will continue to incur operating losses in the future. Failure to
achieve or maintain profitability may materially and adversely affect the future
value of our common stock.
If
we do not obtain additional financing, our business will fail.
Our
current operating funds and revenues from converted vehicle sales are less than
necessary for commercialization of our products. The X Prize award will be of
substantial assistance to us in the near term; however, we will need to
obtain additional financing to complete our business plan. We do not currently
have arrangements for additional financing and we may not find such financing if
required. Market factors may make the timing, amount, terms or conditions of
additional financing unavailable to us.
We are subject to
all of the risks of a new business.
Our
business operations are relatively recent; therefore, we face a potentially
higher risk of business failure. Our sales revenues are still not significant as
of the date of this report. Potential investors should be aware of the
difficulties normally encountered by newer companies and the high rate of
failure of such enterprises. The likelihood of success must be considered in
light of the many problems including: expenses, difficulties, complications,
delays encountered in connection with the commercialization of our products,
unanticipated problems relating to product development, arranging and
negotiating with joint venture partners, additional costs and expenses that may
exceed current estimates. We have limited history upon which to base any
assumption as to the likelihood that our business will prove successful, and
investors should be aware that there is a substantial risk that we may not
generate any significant operating revenues or ever achieve profitable
operations. If we are unsuccessful in addressing these risks, our business will
most likely fail.
Because
we have only recently commenced business operations, we expect to incur
operating losses for the foreseeable future.
Our
management has limited experience in products utilizing electric battery power
and with negotiating commercial arrangements for such products.
Our
management has limited experience in negotiating licenses and joint
ventures to commercialize the types of products we are developing. As a result
of this inexperience, there is a high risk we may be unable to complete our
business plan and negotiate profitable licenses or joint ventures for our
lithium ion battery powered products. Because of the intense competition for our
planned products, there is substantial risk that we will not successfully
commercialize these products.
7
Our
products are highly regulated.
Our
products are highly regulated. There are special safety standards in effect for
vehicles with a top speed of up to 25 miles per hour. Marketing vehicles that
compete with passenger cars, requires compliance with the full federal safety
standards. Regulatory reviews and compliance have already consumed significant
time and resources and will continue to do so as we work towards obtaining a
dealership license. This may adversely affect the timing of bringing products to
market, as well as the profitability of such products once regulatory approvals
are obtained.
Our electric
powered vehicle business is subject to substantial risks.
The
electric battery powered product market is competitive and risky. We are
competing against numerous competitors with greater financial resources than us,
and due to the difficulties of entry into these markets, we may be unsuccessful
and not be able to complete our business plan.
We
intend to rely on lithium ion batteries which, if not properly managed, may pose
a fire hazard.
Another
manufacturer of electric motor vehicles has received five reports of the
batteries overheating, three of which caught fire, though no injuries have been
reported. Our battery management systems will need to lessen or eliminate the
risk of fire from the use of lithium ion batteries as a power source. If we are
not able to develop such systems our business will not develop as planned. If
our battery management systems fail, we could be liable to those who are harmed
as a result of such failure.
Item
1B. Unresolved Staff Comments.
None.
Item
2. Properties.
Our principal executive office is
located in Las Vegas, Nevada . We lease approximately 1,900 square feet under a
lease agreement which commenced in March 2008 and renews on an annual basis. The
lease provides for an aggregate annual payment of $18,000. Our mailing address
is 4894 Lone Mountain Rd., #168, Las Vegas, Nevada 89130, for which we pay
$25 per month, on a month to month basis.
In May 2006, we purchased 40,000 square
foot facility at 158 Rolling Hill in Mooresville, North Carolina. Effective
March 31, 2010 the Company entered into a stipulation agreement with Bayview
Loan Servicing, LLC that reduced the current monthly payment to $5,349,
including interest. In 2013, Bayview Loan Servicing LLC may step up the
interest rate at that time.
We
believe our current facilities will generally be adequate for our needs for the
foreseeable future.
Item
3. Legal Proceedings.
Other
than as described below, we are not a party to any material
legal proceedings and to our knowledge, no such proceedings are threatened
or contemplated.
Hybrid Technologies, Inc. v.
Keith Boucher
An arbitration award in the amount of
$70,803 was awarded to Boucher against the Company for attorney’s fees and costs
incurred in arbitration. A Judgment has been awarded to Keith Boucher. The
parties have agreed upon a monthly payment and the Company is current with the
payments.
F&C Promptly, Inc. v. EV
Innovations, Inc.
F&C Promptly, Inc., a collection
agency, filed in February 2009 a lawsuit against the Company in the District
Court, Clark County, Nevada, for approximately $32,000 for collection of the
account of the Law Offices of Richard McKnight assigned to F&C Promptly,
Inc. for collection. The Company has come to an agreement with F&C
Promptly, Inc. and has agreed to $4,000 a month payment until paid in
full. The Company is current with payments.
8
Caudle & Spears v. EV
Innovations, Inc.
Caudle & Spears has obtained a
default judgment against the Company in Meckenberg County, North Carolina,
General Court, in the amount of $17,686. This law firm represented us in our
litigation against Martin Koebler, a former employee, whom we successfully sued
for return of Company property and other damages. The Company is in settlement
negotiations with Caudle & Spears, since its judgment against Martin Koebler
is still in the collection process. A payment agreement has been reached in the
amount of $2,500.00 per month with no interest until paid. The Company is
current with these payments.
Internal Revenue
Service
The Company has been served with a tax
lien dated March 3, 2010 from the Internal Revenue Service in the total amount
of $251,928.14. Third quarter 2009 taxes are approximately $117,000, which are
included in total due. The Company has a payment plan in place with the Internal
Revenue Service (“IRS”).
Javad
Hajihadian
Javad Hajihadian, an individual ,
had ordered and paid for, the first super car to be produced by Li-ion Motors in
November 2008. The car was in the design stage when it was ordered; with the
understanding it would be a minimum of one year before the car would be
manufactured. The client has changed his mind and his attorney contact the
company to cancel his contract and have his payment refund. The parties have
reached an agreement and the payment is being refunded with interest. The
settlement agreement was for $102,500 and stipulated monthly payments of $10,250
commencing in July 2010. The initial two payments were paid to Mr.
Hajihadian in August 2010, and the Company is current in its
payments.
Item
4. [Removed and Reserved]
PART
II
Item
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
Our shares of
common stock trade and have traded on the NASD
OTC Bulletin Board since March 4, 2002. Our common stock
also trades on the OTCQB Tier of the Pink OTC Markets. The
following table sets forth for our last two fiscal years by quarter the
high and low closing prices of our common shares traded on the OTC Bulletin
Board:
Period
|
High
|
Low
|
||||||
August
1, 2008 to October 31, 2008
|
$ | 3.35 | $ | 0.72 | ||||
November
1, 2008 to February 18, 2009
|
$ | 0.89 | $ | 0.30 | ||||
February
19, 2009 to April 30, 2009 (1)
|
$ | 2.00 | $ | 1.02 | ||||
May
1, 2009 to July 31, 2009
|
$ | 2.10 | $ | 1.30 | ||||
August
1, 2009 to October 31, 2009
|
$ | 1.85 | $ | 1.33 | ||||
November
1, 2009 - January 31, 2010
|
$ | 1.60 | $ | 0.40 | ||||
February
1, 2010 - April 30, 2010
|
$ | 2.25 | $ | 0.66 | ||||
May
1, 2010 - July 31, 2010
|
$ | 2.19 | $ | 0.88 |
(1)
|
A
one-for-three reverse split was effective February 19,
2009.
|
(2)
|
A
one-for-two reverse split was effective February 1,
2010.
|
(3)
|
A
20% stock dividend was paid effective May 28, 2010, on the common
stock.
|
The
above quotations are taken from information provided by
Yahoo and reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual
transactions.
9
Holders
of Common Stock
As of October 15, 2010, we had 242
holders of record of our common stock.
Dividends
Our current policy is to
retain earnings in order to finance our operations. Our board of directors
will determine future declaration and payment of dividends, if any,
in light of the then-current conditions they deem relevant and in accordance
with the Nevada Revised Statutes.
Securities
Authorized for Issuance under Equity Compensation Plans
All stock options under all plans have
been granted, exercised and issued. Currently the Company has no options
warrants or rights available.
10
Sales
of Unregistered Securities
The
following table sets forth the sales of unregistered securities for the last
three years.
Date
|
Title and Amount (1)
|
Purchaser
|
Principal
Underwriter
|
Total Offering Price/
Underwriting
Discounts
|
||||
January
18, 2008
|
8,571,427
shares of common stock issued as collateral security pursuant to Loan
Agreement, dated October 29, 2007, between the Company and Wyndom Capital
Investments Inc. Shares were issued pursuant to anti-dilution provisions
in Loan Agreement.
|
Wyndom
Capital Investments Inc.
|
NA
|
NA/NA
|
||||
May
27, 2008
|
7,500,000
shares of common stock issued as collateral security pursuant to Loan
Agreement, dated May 5, 2008, between the Company and Crystal Capital
Investments Inc.
|
Crystal
Capital Investments Inc.
|
NA
|
NA/NA
|
||||
January
22, 2009
|
3,500
shares of common stock.
|
Consultant
|
NA
|
$3,675/NA
|
||||
February
20, 2009
|
6,666,665
shares of common stock issued as collateral security pursuant to Loan
Agreement, dated October 29, 2007, between the Company and Wyndom Capital
Investments Inc. Shares were issued pursuant to anti-dilution provisions
in Loan Agreement.
|
Wyndom
Capital Investments Inc.
|
NA
|
NA/NA
|
||||
February
20, 2009
|
4,999,999
shares of common stock issued as collateral security pursuant to Loan
Agreement, dated May 5, 2008, between the Company and Crystal Capital
Investments Inc. Shares issued pursuant to anti-dilution provisions in
Loan Agreement.
|
Crystal
Capital Investments, Inc.
|
NA
|
NA/NA
|
||||
February
23, 2010
|
3,749,999
shares of common stock issued as collateral security pursuant to Loan
Agreement, dated May 5, 2008, between the Company and Crystal Capital
Investments Inc. Shares issued pursuant to anti-dilution provisions in
Loan Agreement.
|
Crystal
Capital Investments, Inc.
|
NA
|
NA/NA
|
||||
May
18, 2010
|
3,749,999
shares of common stock issued as collateral security pursuant to Loan
Agreement, dated April 15, 2010, between the Company and Winsor Capital
Inc.
|
Winsor
Capital, Inc.
|
NA
|
NA/NA
|
Item
6. Selected Financial Data.
Not
applicable.
Item 7. Management's Discussion and
Analysis of Financial
Condition and Results of
Operations.
Forward
Looking Statements
This annual report contains
forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect,
future, intend and similar expressions to identify such
forward-looking statements. You should not place too
much reliance on
these forward-looking statements. Our actual results
are likely to differ materially from those anticipated in
these forward-looking statements for
many reasons, including the risks faced by us described in
this section.
11
Results
of Operations for the Year Ended July 31, 2010
Electric
Vehicle Operations
Sales of our electric vehicles for the
fiscal year ended July 31, 2010 were $531,381, an increase of $55,553 or 12% as
compared with 2009.
We convert and manufacture vehicles in
our developmental facility in Mooresville, North Carolina. Our teams of highly
qualified engineers oversee electrical and mechanical staff. This 40,000 square
foot facility has office space, room for manufacturing, conversions,
storage and a battery lab that is leased to Supperlattice, with the potential
for future growth, enabling us to work on many projects and vehicles
concurrently.
With the licenses of our lithium
battery and electric vehicle technology described below, we are concentrating on
sales of our vehicles. We initiated several nationwide newspaper
advertising campaigns which generated some orders for our vehicles,
and we are also seeing as a result a significant increase in inquiries about our
electric vehicle products.
We entered into a License Agreement
(“Superlattice License Agreement”) with Superlattice in April 2008, providing
for our license to Superlattice of our patent applications and technologies for
rechargeable lithium ion batteries for hybrid vehicles and other applications
(“Licensed Products”). Under the Superlattice License Agreement, we have
the right to purchase our requirements of lithium ion batteries from
Superlattice, and our requirements of lithium ion batteries shall be supplied by
Superlattice in preference to, and on a priority basis as compared with, supply
and delivery arrangements in effect for other customers of Superlattice. Our
cost for lithium ion batteries purchased from Superlattice shall be
Superlattice’s actual manufacturing costs for such batteries for the fiscal
quarter of Superlattice in which our purchase takes place. On May 25, 2010, the
Superlattice License Agreement was amended to reflect Superlattice’s territory
would be the United States, U.S. possessions and territories only, and the
Company can license other companies in other parts of the world.
Superlattice agreed to invest a minimum
of $1,500,000 in 2008 and 2009 in development of the technology for the Licensed
Products. In the initial year under the License Agreement, Superlattice invested
$264,043 in the development of technology, and therefore is not in compliance
with its obligations under this covenant of the Superlattice License Agreement.
We have advised Superlattice, that we will not give notice of default against
Superlattice for its failure to comply with this covenant for the term of the
License Agreement.
On May 25, 2010 the Superlattice
License Agreement was amended to limiting the license granted to Superlattice to
only the United States, permitting Li-ion to grant other licenses to companies
in other parts of the world.
Effective May 28, 2010, we entered into
a License Agreement (the “LEVC License Agreement”) with Lithium Electric Vehicle
Corp. (“LEVC”) providing for our license to LEVC of certain of our patent
applications and technologies for electric vehicles and other applications. The
purpose of the license is to expand sales of our current line of products by the
manufacture and sale of such products in Canada, which is LEVC’s exclusive
territory under the License Agreement.
Under the LEVC License Agreement, LEVC
has agreed, in consideration of the grant of the license, to pay us $1,000,000,
of which $666,667 has been paid, plus an amount equal to the independent
valuation of the license under the LEVC License Agreement, less the $1,000,000
payment. The payment of the excess of the valuation amount over the
$1,000,000 payment would be made by way of a convertible debenture or other
securities. Additionally, LEVC, as licensee, would pay an annual fee of
$500,000, commencing on the second anniversary of the date of the LEVC License
Agreement, and a royalty as determined in the independent valuation report. The
initial term of the license is ten years.
Cost
of Sales
Cost of sales as a percentage of net
sales for the fiscal year ended July 31, 2010 was approximately 107% compared to
approximately 141% in 2009. This decrease was primarily attributable to the
decrease in labor expenditures. Based on our historical review of costs, we
expect that cost of sales in the future will remain in line on a percentage
basis with our historic level of approximately 105%. As sales volumes and prices
increase, costs should then reduce as a percentage of sales.
12
General
and Administrative Expenses
General and administrative (“SG&A”)
expenses decreased to $2,428,622 for the fiscal year ended July 31, 2010, as
compared to $4,794,393 during the same period in 2009. The decrease was
attributable a $2,490,000 compensatory expense for stock options
exercised. In addition, the Company had a decrease in (1) advertising and
marketing related expenses of $452,836;(2) warranty expense for
vehicles previously sold of $82,555; (3) financing activity expense of $72,521;
(4) legal fees of $52,474; (5) salaries and wages of $36,979; and (6) other
various expenses of $19,613. The reduction in expenditures was offset with
a $841,207 provision in connection with Superlattice promissory note with the
Company. Of all SG&A expenses the Company incurred during fiscal 2010, the
majority were charges that are expected to be recurring.
Research
and Development Expenses
No set amount has been set aside for
research and development (“R&D”), however, all projects and purchases
require approval prior to initiation. Salaries, payroll taxes, and
benefits expensed to R&D for the year ending July 31, 2010,
amounted to $1,107,532 and $1,054,749 for year ending July 31, 2009. Parts and
supplies expensed to R&D was $129,728 and $202,167 for the years ending July
31, 2010 and July 31, 2009, respectively. Shipping charges and battery
management systems were $27,161 and $39,365, for the years ending July 31, 2010
and July 31, 2009 respectively. We expect that research and development expenses
will continue to remain substantial and grow as we aggressively move to bring
products to market
Interest
Expense
Interest expense decreased to $505,371
for the fiscal year ended July 31, 2010 as compared to $742,825 for 2009.
Interest expense consists primarily of interest related to
borrowings.
Other
Income
Effective April 16, 2008, Superlattice
agreed to lease approximately 5,000 square feet of space (“Leased Space”) in our
North Carolina facility, such Leased Space to be suitable for, and utilized by
Superlattice for, Superlattice’s developmental and manufacturing operations for
Licensed Products pursuant to the License Agreement. The Leased Space is
leased on a month-to-month basis at a monthly rental of $2,756 the monthly
rental to be escalated five (5%) percent annually.
Other income for the fiscal year end
July 31, 2010 consists of (1) accounting fees and rental income from
Superlattice for $70,894; (2) the company received an assignment of
judgment from Martin Koebler for $21,114; and (3) revenue earned from the
license agreement with LEVC of $83,333.
Other income for the fiscal year end
July 31, 2009 consisted of accounting fees and rental income from Superlattice
for $69,375 and other miscellaneous revenue of $8,416.
Net
Loss
Net loss attributable to common
stockholders for the fiscal year ended July 31, 2010 decreased to $3,933,604
from $6,817,974 for the previous fiscal year. Basic and diluted loss
attributable to common stockholders per share of common stock for the fiscal
year ended was $0.22 as compared to $0.66 for the fiscal year ended July 31,
2009.
Liquidity
and Capital Resources
Since our incorporation, we have
financed our operations almost exclusively through the sale of
our common shares to investors and borrowings.
We expect to finance
operations through borrowings and the sale of equity in
the foreseeable future as we receive minimal revenue from
our current business operations. There is no guarantee that we will be
successful in arranging financing on acceptable terms.
At July 31, 2010, we had liabilities of
$7,960,959,as compared with $5,307,066 at July 31, 2009, a working capital
deficiency of $1,836,457 and a stockholders’ deficiency of $5,918,907. In fiscal
2009, we also defaulted under our loan agreement with Wyndom Capital
Investments, Inc. which, as its sole recourse under the loan agreement, took
possession of 10,000,000 shares of our common stock held as
collateral.
Our property, plant and equipment
decreased to $1,919,681 at July 31, 2010, as compared with $1,989,981 at July
31, 2009.
We used net cash in operating
activities of $2,336,670 in the year ended July 31, 2010, as compared
with $2,469,775 in 2009, and cash used in investing activities was
$22,857 in 2010, as compared with $62,106 in
2009.
13
During the year ended July 31, 2010,
from the issuance of a promissory note for a receivable, we advanced $1,282,988
to Superlattice Power, Inc. and was repaid $441,781. During the year ended July
31, 2010, we received net proceeds of $ 2,581,645 from the issuance of
promissory notes for debt, and made repayments of $430,516. We
received advances from a related party of $1,252,014 and repaid $210,455. Total
cash provided by financing activities in the year ended July 31, 2010 was
$3,833,659, as compared with $3,320,880 in 2009.
On May 5, 2008, the Company entered
into a loan agreement with Crystal Capital Ventures Inc. (Crystal”). The loan
agreement provides for loans to the Company of up to $3,000,000, with a minimum
initial loan of $500,000 on May 19, 2008. The notes bear interest payable
monthly in arrears at the rate of 10% per annum and mature and are due and
payable May 4, 2011. The loans under the loan agreement are secured by shares of
the Company’s common stock held by Crystal. The Company is required to issue
shares as collateral at the rate of two and one half shares of the Company’s
common stock for each dollar principal amount of the loan advanced to the
Company. Following disbursement of the first $1,000,000 of funds pursuant
to the loan agreement, on May 27, 2008, the Company issued 2,500,000 shares of
common stock as collateral to Crystal. After the 1:3 reverse stock split in
February 2009 the Company issued Crystal an additional 5,000,000 shares to make
their shares held as collateral total 7,500,000. After the 1:2 reverse stock
split in February 2010 the Company issued Crystal an additional 3,749,999 shares
to make their shares held as collateral total 7,500,000.
As of July 31, 2010, the Company has
borrowed the full $3,000,000 under the loan agreement from Crystal Capital.
Interest expense to Crystal Capital was approximately $341,676 for the year
ended July 31, 2010 and $202,007 for the year ended July 31, 2009, respectively.
The current balance as of July 31, 2010 due to Crystal Capital is
$3,000,000.
On October 12, 2010, the Company
entered into a amendment to the Crystal loan agreement, under which the lender
agreed to extend the due date of the loan to May, 2012.
On February 26, 2010, the Company
entered into a loan agreement with Frontline Asset Management Inc.
(“Frontline”). The loan provides for payments to the Company of $2,000,000 with
interest at a fixed annual rate of 12%. On May 1, 2010, an Addendum to the
original Promissory Note, dated February 26, 2010, which amended the term of the
note to state interest only payments, due on the last day of every month until
maturity date March 1, 2011 when all principal and accrued interest shall be due
and payable. Interest expense for the year ended July 31, 2010 was
$42,341.
On October 11, 2010, the Company
entered into a amendment to the Frontline loan agreement, under which the lender
agreed to extend the due date of the loan to March 1, 2012.
On April 15, 2010 the Company entered
into a loan agreement for $2,000,000 with Winsor Capital Inc. The loan provides
for loans of up to $2,000,000 to the Company with an initial installment of
$250,000 and additional installments of up to $1,750,000 with a 10% interest
rate. The entire loan amount is secured by 10,000,000 shares of the Company
common stock. Each loan installment matures three years from issuance of the
installment. The loan has an anti-dilution clause for the stock issued as
collateral. Stock is issued and delivered proportionately to the delivery of
funds. Interest expense for the year ended July 31, 2010 was
$19,139.
Related
Parties Advances
The Company received additional
advances of $1,252,014 and repaid $1,349,955 in the form of cash, common stock
and two Li-ion manufactured electric vehicles from Salim Rana
Investments (“SSRI”) , a former shareholder, for the year ended July
31, 2010. During fiscal year ended July 31, 2009, the Company received
$2,123,399 and repaid $2,025,458 in the form of cash and common stock. As
of July 31, 2010 and 2009, the amount due to SSRI was $0 and $97,941,
respectively.
Our current operating funds are less
than necessary for commercialization of our planned products, and therefore we
will need to obtain additional financing in order to complete our business
plan. We anticipate that up to $2,000,000 of
additional working capital will be required over the next
12 months for market introduction of
these products through joint venture partners or otherwise. We do not have
sufficient cash on hand to meet these anticipated obligations.
We do not
currently have any arrangements for financing, and we may not be able to find
such financing if required. Obtaining additional financing would be subject to a
number of factors, including investor sentiment. Market factors may make
the timing, amount, terms
or conditions of additional financing
unavailable to us.
Our continuation as a going
concern is dependent upon continued financial support from our shareholders and
other related parties.
14
Critical
Accounting Issues
The Company's discussion and analysis
of its financial condition and results of operations are based upon
the Company's financial statements, which have been prepared in
accordance with accounting principles generally accepted in
the United States of America. The preparation of the financial
statements requires the Company to make estimates and judgments that
affect the reported amount of assets, liabilities, and expenses, and
related disclosures of contingent assets and liabilities. On an
on-going basis, the Company evaluates its estimates, including those
related to intangible assets, income taxes and contingencies
and litigation. The Company bases its estimates on historical
experience and on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the
basis for making judgments about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions
or conditions.
Other
Matters
None.
New
Financial Accounting Standards
The Financial Accounting Standards
Board (“FASB”) has codified a single source of U.S. Generally Accepted
Accounting Principles (“GAAP”), the Accounting Standards Codification™. Unless
needed to clarify a point to readers, we will refrain from citing specific
section references when discussing application of accounting principles or
addressing new or pending accounting rule changes. There are no recently issued
accounting standards that are expected to have a material effect on our
financial condition, results of operations or cash flows.
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk.
Interest
Rate Risk - Interest rate risk refers to fluctuations in the value of a security
resulting from changes in the general level of interest rates. Investments that
are classified as cash and cash equivalents have original maturities of three
months or less. Our interest income is sensitive to changes in the general level
of U.S. interest rates. We do not have significant short-term investments,
and due to the short-term nature of our investments, we believe that there is
not a material risk exposure. Our debt is at fixed interest
rates.
Credit
Risk - Our accounts receivables are subject, in the normal course of business,
to collection risks. We regularly assess these risks and have established
policies and business practices to protect against the adverse effects of
collection risks. As a result we do not anticipate any material losses in this
area.
Item
8. Financial Statements and Supplementary Data.
LI-ION
MOTORS, CORP.
CONSOLIDATED
FINANCIAL STATEMENTS
July
31, 2010 and 2009
15
TABLE
OF CONTENTS
Reports
of Independent Registered Accounting Firms
|
17 | ||
|
|||
Consolidated
Balance Sheets as of July 31, 2010 and 2009
|
19 | ||
|
|||
Consolidated
Statements of Operations for Years Ended July 31, 2010 and July 31,
2009
|
20 | ||
|
|||
Consolidated
Statements of Cash Flows for the Years Ended July 31, 2010 and July 31,
2009
|
21 | ||
|
|||
Consolidated
Statement of Stockholders’ Deficiency for the Years Ended July 31, 2010
and July 31, 2009
|
22 | ||
|
|||
Notes
to Consolidated Financial Statements, as of and for the Years Ending
July 31, 2010 and 2009
|
23 |
16
Madsen
& Associates, CPA's Inc.
684
East Vine Street
Murray,
UT 84107
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors
Li-ion
Motors Corp.
Las
Vegas, NV
We have
audited the accompanying consolidated balance sheet of Li-ion Motors Corp.
(formerly EV Innovations, Inc.) (collectively, the “Company”) as of July 31,
2010, and the related consolidated statements of operations, stockholders'
deficiency and cash flows for the year then ended. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Li-ion Motors Corp. as of July 31,
2009, were audited by other auditors whose report, dated November 4, 2009,
expressed an unqualified opinion on those statements.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our
opinion, the 2010 financial statements present fairly, in all material respects,
the financial position of the Company as of July 31, 2010, and the results of
its operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of
America.
/s/
Madsen & Associates, CPAs Inc.
October
29, 2010
17
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors
EV
Innovations, Inc.
Las
Vegas, NV
We have
audited the accompanying balance sheet of EV Innovations, Inc. (collectively,
the “Company”) (a development stage enterprise) as of July 31, 2009, and the
related statements of operations, stockholders’ deficiency, and cash flows for
the year then ended. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company's
Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our
opinion, such financial statements present fairly, in all material respects, the
financial position of the Company as of July 31, 2009, and the results of its
operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying consolidated financial statements have been prepared assuming the
company will continue as a going concern. As shown in the consolidated
financial statements, the Company incurred a net loss of $6.8 million for the
year ending July 31, 2009. As of July 31, 2009, current liabilities
exceeded current assets by $1.3 million and the Company has a deficit of $3.0
million. During the year ended July 31, 2009, the Company defaulted on two
loans and the shares used as collateral to secure one of the loans was used to
extinguish the loan and all unpaid interest. These factors, and others
discussed in Notes 1 and 12, raise substantial doubt about the Company’s ability
to continue as a going concern.
These
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
/s/Wiener,
Goodman & Company, P.C.
Eatontown,
New Jersey
November
4, 2009
18
Li-ion
Motors Corp.
(Formerly
EV Innovations, Inc.)
Consolidated
Balance Sheets
July
31,
|
||||||||
2010
|
2009
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 2,113 | $ | 5,182 | ||||
Accounts
receivable, net of allowance for doubtful accounts of $0
|
- | 13,522 | ||||||
Note
receivable, net of allowance for doubtful account of
$841,207
|
- | - | ||||||
Inventories
|
35,000 | 227,826 | ||||||
Employee
advances
|
10,000 | 1,508 | ||||||
Other
current assets
|
51,001 | 18,009 | ||||||
Total
current assets
|
98,113 | 266,047 | ||||||
Property
and equipment, net
|
1,919,681 | 1,989,981 | ||||||
Deferred
patent costs
|
24,258 | 24,258 | ||||||
Total
assets
|
$ | 2,042,052 | $ | 2,280,286 | ||||
Liabilities
and Stockholders' Deficiency
|
||||||||
Current
liabilities:
|
||||||||
Bank
overdrafts
|
$ | 14,104 | $ | - | ||||
Accounts
payable and accrued expenses
|
1,296,734 | 999,749 | ||||||
Current
portion of long-term debt
|
22,444 | 39,702 | ||||||
Customer
deposits
|
100,000 | 391,199 | ||||||
Deferred
revenue
|
501,288 | 3,808 | ||||||
Due
to related parties
|
- | 97,940 | ||||||
Total
current liabilities
|
1,934,570 | 1,532,398 | ||||||
Long-term
liabilities:
|
||||||||
Long-term
debt, less current portion
|
5,943,056 | 3,774,668 | ||||||
Long-term
deferred revenue, less current portion
|
83,333 | - | ||||||
|
||||||||
Total
liabilities
|
7,960,959 | 5,307,066 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Stockholders'
deficiency
|
||||||||
Preferred
stock, $.001 par value, 5,000,000 shares authorized, 0 issued and
outstanding
|
- | - | ||||||
Common
stock, $.001 par value, 100,000,000 shares authorized, 30,047,301 issued
and
|
||||||||
outstanding
at July 31, 2010 and 20,884,101 at July 31, 2009
respectively
|
30,047 | 20,884 | ||||||
Additional
paid-in capital
|
56,758,511 | 55,731,174 | ||||||
Accumulated
deficit
|
(62,699,029 | ) | (58,765,425 | ) | ||||
Accumulated
other comprehensive income
|
(8,436 | ) | (13,413 | ) | ||||
Stockholders'
deficiency
|
(5,918,907 | ) | (3,026,780 | ) | ||||
Total
liabilities and stockholders' deficiency
|
$ | 2,042,052 | $ | 2,280,286 |
See
accompanying notes to consolidated financial statements
19
Li-ion
Motors Corp.
(Formerly
EV Innovations, Inc.)
Consolidated
Statements of Operations
For the Years Ended
|
||||||||
July 31,
|
||||||||
2010
|
2009
|
|||||||
Sales
|
$ | 531,381 | $ | 475,828 | ||||
Costs
and expenses:
|
||||||||
Cost
of sales
|
559,569 | 625,866 | ||||||
General
and administrative
|
2,428,622 | 4,794,393 | ||||||
Research
and development
|
1,264,420 | 1,296,281 | ||||||
Total
costs and expenses
|
4,252,611 | 6,716,540 | ||||||
Loss
from continuing operations
|
(3,721,230 | ) | (6,240,712 | ) | ||||
Other
(expenses)/income:
|
||||||||
Interest
expense
|
(505,371 | ) | (742,825 | ) | ||||
Other
income
|
175,341 | 77,791 | ||||||
Forgiveness
of debt
|
117,656 | 87,772 | ||||||
Loss
before provision for (benefit from) income taxes
|
(3,933,604 | ) | (6,817,974 | ) | ||||
Provision
for (benefit from) income taxes
|
- | - | ||||||
Net
loss
|
(3,933,604 | ) | (6,817,974 | ) | ||||
Less:
Net loss attributable to noncontrolling interest
|
- | - | ||||||
Net
loss attributable to Li-ion Motors Corp
|
$ | (3,933,604 | ) | $ | (6,817,974 | ) | ||
Loss
per share - basic and diluted:
|
||||||||
Loss
per common share attributable to Li-ion Motors Corp. common
shareholders
|
$ | (0.22 | ) | $ | (0.66 | ) | ||
Weighted
average number of shares outstanding - basic and diluted
|
17,986,016 | 10,278,989 | ||||||
Amounts
attributable to Li-ion Motors Corp. common shareholders:
|
||||||||
Net
loss
|
$ | (3,933,604 | ) | $ | (6,817,974 | ) |
See
accompanying notes to consolidated financial statements
20
Li-ion
Motors Corp.
(Formerly
EV Innovations, Inc.)
Consolidated
Statements of Cash Flows
For
the Years Ended
|
||||||||
July
31,
|
||||||||
2010
|
2009
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss
|
$ | (3,933,604 | ) | $ | (6,817,974 | ) | ||
Adjustments
to reconcile net loss to net cash utilized by operating
activities
|
||||||||
Depreciation
|
77,917 | 82,350 | ||||||
Loss
on disposal of property and equipment
|
15,242 | - | ||||||
Provision
for doubtful accounts
|
841,207 | - | ||||||
Non-cash
stock-based compensation
|
70,000 | 2,630,000 | ||||||
Non-cash
sale of electric vehicles
|
(173,000 | ) | - | |||||
Increase
(decrease) in cash flows from changes in operating assets and
liabilities
|
||||||||
Accounts
receivable, net
|
13,522 | 79 | ||||||
Inventories
|
192,826 | 59,484 | ||||||
Employee
advances
|
(8,492 | ) | (1,508 | ) | ||||
Prepaid
expenses and other current assets
|
(32,991 | ) | 51,110 | |||||
Bank
overdraft
|
14,104 | 51,600 | ||||||
Accounts
payable and accrued expenses
|
296,985 | 1,229,237 | ||||||
Customer
deposits
|
(291,199 | ) | 242,039 | |||||
Deferred
revenue
|
580,813 | 3,808 | ||||||
Net
cash used in operating activities
|
(2,336,670 | ) | (2,469,775 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Additions
to property and equipment
|
(22,857 | ) | (57,751 | ) | ||||
Deferred
patent costs
|
- | (4,355 | ) | |||||
Net
cash utilized in investing activities
|
(22,857 | ) | (62,106 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Advances
on promissory note
|
(1,282,988 | ) | - | |||||
Payments
received on promissory note
|
441,781 | - | ||||||
Proceeds
from issuance of debt
|
2,581,645 | 1,146,481 | ||||||
Payments
on debt
|
(430,516 | ) | 2,174,399 | |||||
Advances
from related parties
|
1,252,014 | (76,260 | ) | |||||
Payments
to related parties
|
(210,455 | ) | (789,609 | ) | ||||
Net
cash provided by financing activities
|
2,351,480 | 2,455,011 | ||||||
Effect
of exchange rate changes on cash and cash equivalents
|
4,977 | (19,043 | ) | |||||
CHANGE
IN CASH AND CASH EQUIVALENTS
|
||||||||
Net
decrease in cash and cash equivalents
|
(3,069 | ) | (95,913 | ) | ||||
Cash
and cash equivalents at beginning of year
|
5,182 | 101,095 | ||||||
Cash
and cash equivalents at end of year
|
$ | 2,113 | $ | 5,182 | ||||
SUPPLEMENTAL
CASH FLOW DISCLOSURES
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | 352,129 | $ | 119,032 | ||||
Income
taxes
|
$ | - | $ | - | ||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
|
||||||||
Shares
issued for related party advances
|
$ | 966,500 | $ | 1,286,850 | ||||
Accrued
expenses transferred to long-term debt
|
$ | - | $ | 538,319 |
See
accompanying notes to consolidated financial statements
21
Li-ion
Motors Corp.
(Formerly
EV Innovations, Inc.)
Statement
of Stockholders' Deficiency
For
the Years Ended As Noted
Number
of
Common
Shares
|
Common
Shares
$0.001
Par
Value
|
Additional
Paid
in
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
Comprehensive
Income
(Loss)
|
Total
|
||||||||||||||||||||||
Balance
- August 1,
2008
|
23,347,257 | $ | 23,347 | $ | 47,790,509 | $ | (51,947,451 | ) | $ | 5,630 | $ | (4,127,965 | ) | |||||||||||||||
Exercise
of stock options
|
3,500 | 4 | (4 | ) | - | - | - | |||||||||||||||||||||
1:3
Reverse stock split adjustment
|
(15,566,844 | ) | (15,567 | ) | 15,567 | - | - | - | ||||||||||||||||||||
Issuance
of non-employee stock options
|
- | - | 2,630,000 | - | - | 2,630,000 | ||||||||||||||||||||||
Common
stock issued as collateral on loan
|
11,666,664 | 11,667 | (11,667 | ) | - | - | - | |||||||||||||||||||||
Exercise
of stock options
|
1,433,524 | 1,433 | 1,285,417 | - | - | 1,286,850 | ||||||||||||||||||||||
Conversion
of loan to equity
|
- | - | 4,000,000 | - | - | 4,000,000 | ||||||||||||||||||||||
Conversion
of accrued interest to equity
|
- | - | 21,352 | - | - | 21,352 | ||||||||||||||||||||||
Foreign
currency translation
|
- | - | - | - | (19,043 | ) | $ | (19,043 | ) | (19,043 | ) | |||||||||||||||||
Net
Loss
|
(6,817,974 | ) | (6,817,974 | ) | (6,817,974 | ) | ||||||||||||||||||||||
Comprehensive
loss
|
- | - | - | - | $ | (6,837,017 | ) | - | ||||||||||||||||||||
Balance
- July 31, 2009
|
20,884,101 | 20,884 | 55,731,174 | (58,765,425 | ) | (13,413 | ) | (3,026,780 | ) | |||||||||||||||||||
Exercise
of stock options
|
685,000 | 685 | 615,815 | - | - | 616,500 | ||||||||||||||||||||||
1:2
Reverse stock split adjustment
|
(10,779,696 | ) | (10,780 | ) | 10,780 | - | - | - | ||||||||||||||||||||
Common
stock issued as collateral on loan
|
3,749,999 | 3,750 | (3,750 | ) | - | - | - | |||||||||||||||||||||
Common
stock issued as collateral on loan
|
10,000,000 | 10,000 | (10,000 | ) | - | - | - | |||||||||||||||||||||
Exercise
of stock options
|
500,000 | 500 | 349,500 | 350,000 | ||||||||||||||||||||||||
1:5
Forward split adjustment
|
5,007,897 | 5,008 | (5,008 | ) | - | - | - | |||||||||||||||||||||
Issuance
of non-employee stock options
|
- | - | 70,000 | - | - | 70,000 | ||||||||||||||||||||||
Foreign
currency translation
|
- | - | - | - | 4,977 | $ | 4,977 | 4,977 | ||||||||||||||||||||
Net
Loss
|
- | - | - | (3,933,604 | ) | - | (3,933,604 | ) | (3,933,604 | ) | ||||||||||||||||||
Comprehensive
loss
|
$ | (3,928,627 | ) | - | ||||||||||||||||||||||||
Balance
- July 31, 2010
|
30,047,301 | $ | 30,047 | $ | 56,758,511 | $ | (62,699,029 | ) | $ | (8,436 | ) | $ | (5,918,907 | ) |
See
accompanying notes to consolidated financial statements
22
Li-ion
Motors Corp.
(Formerly
EV Innovations, Inc.)
Notes to
Consolidated Financial Statements
For the
Years Ended and as of July 31, 2010 and 2009
Note
1. Financial Statement Presentation
History
and Nature of Business
Li-ion
Motors Corp (formerly EV Innovations, Inc., the “Company”) was incorporated
under the laws of the State of Nevada on April 12, 2000. The “Company’s”
original business was the exploration and development of mineral interests. The
Company abandoned this business in 2003.
The
Company is currently pursuing the development and marketing of electric powered
vehicles and products based on the advanced lithium battery technology it has
developed. As of July 31, 2009 the Company no longer considered itself a
development stage company as planned principal operations have begun in its
primary line of business.
On April
16, 2008, the Company sold their controlling interest of approximately 69% of
the outstanding common stock in Zingo, Inc. (presently Superlattice Power, Inc.,
“SPI”). Prior to April 16, 2008, SPI was a related party that provided
telecommunication services to business and residential customers utilizing VOIP
technology and currently is researching and developing rechargeable lithium ion
batteries.
Effective
April 15, 2008, the Company entered into a License Agreement (“License
Agreement”) with SPI providing for their license to SPI of their patent
applications and technologies for rechargeable lithium ion batteries for
electric vehicles and other applications (“Licensed Products”). Under the
License Agreement, the Company has the right to purchase their requirements of
lithium ion batteries from SPI, and their requirements of lithium ion batteries
shall be supplied by SPI in preference to, and on a priority basis as compared
with, supply and delivery arrangements in effect for other customers of SPI. The
Company’s cost for lithium ion batteries purchased from SPI shall be SPI’s
actual manufacturing costs for such batteries for the fiscal quarter of SPI in
which the Company’s purchase takes place. On May 25, 2010 the license agreement
was amended to reflect Superlattice’s territory would only be the United States
and US possessions and territories and we can license to other companies in
other parts of the world. The Company issued a license to a firm for the rights
in Canada in 2010.
Under the
terms of the license agreement, SPI has agreed to invest a minimum of $1,500,000
in each of the next two years in development of the technology for the Licensed
Products. To date, SPI has not met the minimum requirements in the development
of technology, and therefore, is not in compliance with its obligations under
this covenant of the license agreement. The Company has advised
SPI that it will not give notice of default against them for their
failure to comply with this covenant over the term of the License
Agreement.
Effective
May 28, 2010 the Company entered into a ten year license agreement with Lithium
Electric Vehicle Corp. (“LEVC”) providing for the Company to license to LEVC
certain of the Company’s patent applications and technologies for electric
vehicles and other applications. The purpose of the licensee is to expand sales
of the Company’s current line of products by the manufacture and sale of such
products in Canada, which is LEVC’s exclusive territory under the license
agreement.
Basis of
Presentation
The
Company’s business is subject to most of the risks inherent in the establishment
of a new business enterprise. The likelihood of success of the Company must be
considered in light of the expenses, difficulties, delays and unanticipated
challenges encountered in connection with the formation of a new business,
raising operating and development capital, and the marketing of a new
product. There is no assurance the Company will ultimately achieve a
profitable level of operations.
On
October 27, 2010, the Company received $2.5 million as an award from Automotive
X-Prize (see Note 15) and during the past fiscal year entered into a ten year
license agreement with LEVC expanding the Company's products and technology in
Canada. The Company expects the funds received from Automotive X-Prize and
LEVC and the expected revenue from operations to be sufficient to cover
operations over the next twelve months.
23
In
January 2009, the Company’s shareholders approved a one-for-three reverse stock
split of its outstanding common shares which became effective on February 19,
2009. Also on February 19, 2009 the authorized shares of the Company was
increased from 35,714,285 to 50,000,000 shares.
In
January 2010, the Board of Directors approved a merger with a 100% subsidiary
resulting in the change of the Company’s name to Li-ion Motors, Corp. The Board
of Directors also approved a two-for-one reverse split that was effective
February 1, 2010 and the authorized shares were decreased in the same
ratio to 25,000,000 shares. By motion of the Board on May 17, 2010,
the authorized was increased from 25,000,000 shares to 100,000,000
shares.
Except
for the presentation of common shares authorized and issued on the consolidated
balance sheet and shares presented in the consolidated statement of
stockholders' deficiency, all shares and par share information has been revised
to give retroactive effect to the reverse stock splits.
On April
20, 2010, the Company approved a 20% restricted stock dividend for the holders
of its common stock, consisting of one share of common stock for each five
shares held of record on the May 28, 2010 record date.
On July
1, 2009, the Financial Accounting Standards Board (“FASB”) established
Accounting Standards Codification (“ASC”) as the primary source of authoritative
generally accepted accounting principles (“GAAP”) recognized by the FASB to be
applied by nongovernmental entities. Although the establishment of the ASC
did not change current GAAP, it did change the way we refer to GAAP throughout
this document to reflect the updated referencing convention.
Note
2. Summary of Significant Accounting Policies
Basis
of Consolidation
The
consolidated financial statements included the accounts and records of the
Company and its wholly-owned and majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The Company does
not have any special purpose entities. For those consolidated subsidiaries in
which the company's ownership is less than 100 percent (100%), the outside
stockholders' interests are shown as non-controlling interest. The
non-controlling interest of the company's earnings or loss is classified as net
income (loss) attributable to non-controlling interest in the consolidated
statement of operations.
The
following is a listing of the Company's subsidiaries and its ownership
interests:
Global
Electric, Corp.
|
67.57 | % | ||
R
Electric Car, Co.
|
67.57 | % | ||
Solium
Power, Corp.
|
67.57 | % | ||
Hybrid
Technologies USA Distributing Inc.
|
100 | % | ||
Hybrid
Electric Vehicles India Pvt. Ltd.
|
100 | % |
Use
of Estimates
The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires the Company to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and disclosure of contingent assets and liabilities. On
an on-going basis, the Company evaluates its estimates and judgments, including
those related to revenue recognition, inventories, adequacy of allowances for
doubtful accounts, valuation of long-lived assets and goodwill, income taxes,
litigation and warranties. The Company bases its estimates on historical and
anticipated results and trends and on various other assumptions that the Company
believes are reasonable under the circumstances, including assumptions as to
future events. The policies discussed below are considered by management to be
critical to an understanding of the Company’s financial statements. These
estimates form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. By
their nature, estimates are subject to an inherent degree of uncertainty. Actual
results may differ from those estimates.
24
Fair
Value Measurements
The
Company utilizes the accounting guidance for fair value measurements and
disclosures for all financial assets and liabilities and nonfinancial assets and
liabilities that are recognized or disclosed at fair value in the consolidated
financial statements on a recurring basis or on a nonrecurring basis during the
reporting period. The fair value is an exit price, representing the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants based upon the best use of the
asset or liability at the measurement date. The Company utilizes market
data or assumptions that market participants would use in pricing the asset or
liability. The accounting guidance establishes a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair value.
These tiers are defined as follows:
Level 1
- Observable inputs such as quoted market prices in active
markets
Level 2 - Inputs
other than quoted prices in active markets that are either directly or
indirectly observable
Level 3 - Unobservable inputs
about which little or no market data exists, therefore requiring an entity to
develop its own assumptions
As of
July 31, 2010, the Company held certain financial assets that are measured at
fair value on a recurring basis. These consisted of cash and cash
equivalents. The fair values of the cash and cash equivalents is
determined based on quoted market prices in public markets and is categorized as
Level 1. The Company does not have any financial assets measured at fair
value on a recurring basis as Level 3 and there were no transfers in or out of
Level 1, Level 2 or Level 3 during the years ended July 31, 2010 and
2009.
The
following table sets forth by level, within the fair value hierarchy, the
Company’s financial assets accounted for at fair value on a recurring basis as
of July 31, 2010 and 2009.
Assets
at Fair Value as of July 31, 2010 and 2009 Using
|
||||||||||||||||
Quoted
Prices in
Activated
Markets for
Identical
Asssets
|
Significant
Other
Observable
Inputs
|
Significant
Observable
Inputs
|
||||||||||||||
Total
|
(Level
1)
|
(Level
2)
|
(Level
2)
|
|||||||||||||
July
31, 2010
|
||||||||||||||||
Cash
and Cash Equivalents
|
$ | 2,113 | $ | 2,113 | $ | - | $ | - | ||||||||
July
31, 2009
|
||||||||||||||||
Cash
and Cash Equivalents
|
$ | 5,182 | $ | 5,182 | $ | - | $ | - |
The
Company has other financial instruments, such as receivables, accounts payable
and other liabilities which have been excluded from the tables above. Due
to the short-term nature of these instruments, the carrying value of
receivables, accounts payable and other liabilities approximate their fair
values. The Company did not have any other financial instruments with the
scope of the fair value disclosure requirements as of July 31,
2010.
Non-financial
assets and liabilities, such as goodwill and long-lived assets, are accounted
for at fair value on a nonrecurring basis. These items are tested for
impairment on the occurrence of a triggering event or in the case of goodwill,
on at least an annual basis. The Company's annual test on its long-lived
assets indicated that the carrying value of its long-lived assets was
recoverable and that no impairment existed as of the testing date.
Cash
and Cash Equivalents
Cash and
cash equivalents consist of highly liquid investments, which are readily
convertible into cash with original maturities of three months or
less.
Accounts
Receivable
The
Company provides credit to customers in the normal course of business. An
allowance for accounts receivable is estimated by management based in part on
the aging of receivables and historical transactions. Periodically management
reviews accounts receivable for accounts that appear to be uncollectible and
writes off these uncollectible balances against the allowance
accordingly.
25
Inventories
Inventories
are stated at the lower of cost or market using the first-in, first-out (“FIFO”)
method. The Company may write down its inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory and
the estimated market value based upon assumptions about future demand and market
conditions.
Property
and Equipment
Property
and equipment are recorded at cost less accumulated depreciation. Depreciation
of property and equipment are accounted for by methods over the following
estimated useful lives:
Lives
|
Methods
|
||
Building
Improvements
|
39
Years
|
Straight
Line
|
|
Furniture
and Fixtures
|
10
years
|
Declining
Balance
|
|
Software
|
3-5
years
|
Straight
Line
|
|
Computers
|
5
years
|
Straight
Line
|
Significant
improvements are capitalized, while maintenance and repairs are charged to
operations as incurred.
Long-Lived
Assets
The
Company accounts for long-lived assets in accordance with FASB ASC 360-10-35,
“Impairment or Disposed of Long-lived Assets”, (“ASC 360-10-35”). The carrying
value of long-lived assets is reviewed on a regular basis for the existence of
facts and circumstances that may suggest impairment. The Company believes the
estimate of its valuation of long-lived assets is a “critical accounting
estimate” because if circumstances arose that led to a decrease in the
valuations it could have a material impact on the Company’s results of
operations. The Company recognizes impairment when the sum of undiscounted
future cash flows is less than the carrying amount of the asset. The write down
of the asset is charged to the period in which the impairment occurs. The
Company does not believe that any changes have taken place.
Deferred
Patent Costs
The
Company capitalizes costs directly incurred in pursuing patent applications as
deferred patent costs. When such applications result in an issued patent, the
related costs are amortized over the remaining legal life of the patents, which
is assumed to be 17 years, using the straight-line method. On a quarterly basis,
the Company reviews the issued patents and pending patent applications and if
the Company determines to abandon a patent application, or an issued patent no
longer has economic value, the unamortized balance in deferred patent costs
relating to that patent is immediately expensed. As of July 31, 2010 our patents
were in the approval processing phase.
Revenue
Recognition
The
Company recognizes revenue in accordance with the guidance contained in
Financial Accounting Standards Board Accounting Standards Codification 605,
“Revenue Recognition”, (“ASC 605”) and other relevant accounting
literature. Revenue is recognized when the product has been delivered and
title and risk of loss have passed to the customer, collection of the resulting
receivable is deemed reasonably assured by management, persuasive evidence of an
arrangement exists and the sale price is fixed and determinable.
Revenue
received from the sale of license agreements is earned over the life of the
agreement. Revenue received but not earned is classified as deferred
revenue on the Company's consolidated balance sheet.
The
Company typically has a twenty-four month warranty policy for workmanship
defects. The Company establishes an accrual for warranty work and expenses
the amount over a two year period.
26
Customer
Deposits
The
Company receives advances from customers for automobiles to be manufactured in
the future. The Company applies these advances against future
billings. As of July 31, 2010 and 2009, customer deposits amounted to
$100,000 and $391,199, respectively.
Shipping
and Handling
Shipping
and handling costs related to services and product sales are expensed as
incurred.
Advertising
Advertising
costs are expensed as incurred and are included in general and administrative
expenses. Total advertising expenditures for the year ended July 31, 2010 and
2009 and amounted to $73,975 and $526,811, respectively.
Research
and Development
No set
amount has been set aside for research and development (“R&D”), however, all
projects and purchases require approval prior to initiation.
Salaries, payroll taxes, and benefits expensed to R&D for the year
ending July 31, 2010, amounted to $1,107,532 and $1,054,749 for year
ending July 31, 2009. Parts and supplies expensed to R&D was $129,728 and
$202,167 for the year endings July 31, 2010 and July 31, 2009, respectively.
Shipping charges and battery management systems were $27,160 and $39,365, for
the year ending July 31, 2010 and July 31, 2009 respectively. We expect that
research and development expenses will continue to remain substantial and grow
as we aggressively move to bring products to market
Concentration
of Risk
The
Company maintains cash deposit accounts and may have certificates of deposits
which at times may exceed federally insured limits. These accounts have not
experienced any losses and the Company believes it is not exposed to any
significant credit risk related to cash.
Income
taxes
Deferred
income tax assets or liabilities are computed based on the temporary differences
between the financial statement and income tax bases of assets and liabilities
using the statutory marginal income tax rate in effect for the years in which
the differences are expected to reverse. Deferred income tax expenses or credits
are based on the changes in the deferred income tax assets or liabilities from
period to period. A valuation allowance against deferred tax assets is required
if, based on the weight of available evidence, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. The
valuation allowance should be sufficient to reduce the deferred tax asset to the
amount that is more likely than not to be realized.
Foreign
Currency Translation
The
functional currency for some foreign operations is the local currency. The
reporting currency is the US Dollar. Assets and liabilities of foreign
operations are translated at balance sheet date rates of exchange and income,
expense and cash flow items are translated at the average exchange rate for the
period. Translation adjustments in future periods will be recorded in Other
Comprehensive Income (Loss). The translation losses for the years ended July 31,
2010 and 2009 were $4,977 and $19,043, respectively.
Comprehensive
Loss
The
Company reports comprehensive loss in accordance with the requirements of FASB
ASC 220-10-15, “Comprehensive Income”, and (“ASC 220-10-15”). For the years
ended July 31, 2010 and 2009, the difference between net loss and comprehensive
loss was foreign currency translation.
Loss
Per Common Share
Basic
loss per common share is computed by dividing net loss by the weighted average
number of common shares outstanding during the specified period. Diluted
loss per common share is computed by dividing net loss by the weighted average
number of common shares and potential common shares during the specified period.
All potentially dilutive securities, which include options convertible into 0
and 1,585,000 common shares at July 31, 2010 and 2009, respectively, have been
excluded from the computations, as their effect is
anti-dilutive.
27
Recently
Issued Pronouncements
FASB has
codified a single source of U.S. Generally Accepted Accounting Principles, the
Accounting Standards Codification™. Unless needed to clarify a point to readers,
we will refrain from citing specific section references when discussing
application of accounting principles or addressing new or pending accounting
rule changes. There are no recently issued accounting standards that are
expected to have a material effect on our financial condition, results of
operations or cash flows.
Note
3. Notes Receivable
The
Company advanced Superlattice Power, Inc. $1,282,988, of which $441,781 was
repaid during the year ended July 31, 2010. As of July 31, 2010 and July 31,
2009, the amount due to the Company was $841,207 and $0, respectively. The
balance due to the Company has provided a valuation allowance and included in
selling, general and administrative expenses, as an allowance for doubtful
account, due to uncertain prospect of collection.
Note
4. Inventories
Inventories
consist of the following:
Years
Ended
|
||||||||
July
31,
|
||||||||
2010
|
2009
|
|||||||
Raw
Materials
|
$ | - | $ | 119,153 | ||||
Work-In-Progress
|
- | 108,673 | ||||||
Finished
Goods
|
35,000 | - | ||||||
$ | 35,000 | $ | 227,826 |
Raw
materials, work in progress and finished goods for the year ended July 31, 2010,
and year ended July 31, 2009, are related to the Company’s planned sales of
electric powered vehicles.
Note 5. Property and
Equipment
Property
and equipment consist of:
Years
Ended
|
||||||||
July 31,
|
||||||||
2010
|
2009
|
|||||||
Building
and Improvements
|
$ | 1,287,001 | $ | 1,274,636 | ||||
Furniture
and Fixtures
|
15,794 | 29,023 | ||||||
Office
Equipment
|
146,016 | 143,965 | ||||||
Machinery
and Equipment
|
36,971 | 36,971 | ||||||
Vehicles
|
66,429 | 60,979 | ||||||
Software
Costs
|
28,913 | 32,924 | ||||||
Land
|
700,000 | 700,000 | ||||||
2,281,124 | 2,278,498 | |||||||
Less
Accumulated Depreciation
|
(361,443 | ) | (288,517 | ) | ||||
Net
Property and Equipment
|
$ | 1,919,681 | $ | 1,989,981 |
28
Depreciation
expense for the year ended July 31, 2010 and 2009 was $77,917 and $82,350,
respectively and is included in selling, general and administrative expenses on
the Company’s consolidated statement of operations.
Note
6. Other Current Assets
Years
Ended
|
||||||||
July 31,
|
||||||||
2010
|
2009
|
|||||||
Retainers
|
$ | 7,500 | $ | - | ||||
Deferred
Warranty Asset
|
25,594 | - | ||||||
Prepaid
Expenses
|
17,907 | 18,009 | ||||||
Total
|
$ | 51,001 | $ | 18,009 |
Note
7. Accounts Payable and Accrued Expenses
Accounts
payable and accrued expenses and other current liabilities at July 31, 2010 and
2009 consisted of:
Years
Ended
|
||||||||
July 31,
|
||||||||
2010
|
2009
|
|||||||
Accounts
Payable
|
$ | 422,018 | $ | 460,896 | ||||
Accounts
Payable - Related Parties
|
63,325 | - | ||||||
Wages,
Paid Leave and Payroll Related Taxes
|
407,884 | 267,353 | ||||||
Accrued
Interest
|
114,619 | 121,344 | ||||||
Legal
Settlements
|
177,500 | - | ||||||
Other
|
111,388 | 150,156 | ||||||
Total
|
$ | 1,296,734 | $ | 999,749 |
Note
8. Advances To/From Related Parties and Related Party Transactions
The
Company received additional advances of $1,252,014 and repaid $1,349,955 in the
form of cash, common stock and two Li-ion manufactured electric vehicles from
Salim Rana Investments (“SSRI”) , a former shareholder, for the year
ended July 31, 2010. During fiscal year ended July 31, 2009, the Company
received $2,123,399 and repaid $2,025,458 in the form of cash and common
stock. As of July 31, 2010 and 2009, the amount due to SSRI was $0 and
$97,941, respectively.
The
Company did not receive or repay any advances to Greg Navone, a former Director
of the Company, during the year ended July 31, 2010. During the year ended
July 31, 2009 the Company received and repaid $51,000. Mr.
Navone resigned as a director of the Company on July 10, 2009. The Company
owes director fees to Mr. Navone in the amount of $4,665 which is included in
the accounts payable on the Company’s consolidated balance sheet as of July 31,
2010.
Due from
related parties and advances from related parties are reported as current assets
or liabilities. These advances are not subject to written agreements and have no
specific repayment terms but are deemed due on demand and are not interest
bearing notes.
29
Note
9. Long-Term Debt
Long-term
debt consists of:
Years
Ended
|
||||||||
July
31,
|
||||||||
2010
|
2009
|
|||||||
5%
Note payable to Bayview Loan Servicing, LLC, payable in monthly
installments of $5,349 including interest, collateralized by real property
due in full on or before March 2038 (1)
|
$ | 953,437 | $ | 954,631 | ||||
10%
Note payable to Crystal Capital Ventures, payable in May 2012
collateralized by 9,000,000 shares of the Company's common stock
(2)
|
3,000,000 | 2,853,859 | ||||||
11.24%
Note payable to Allegiance Direct Bank, payable in monthly installments of
approximately $1000, due in full on February 28, 2011 (3)
|
5,000 | 5,880 | ||||||
12%
Note payable to Frontline Asset Management, payable in monthly
installments of interest only, due in full on March 1, 2012
(4)
|
1,235,404 | - | ||||||
10%
Note payable to Winsor Capital Inc. due in full on April 15, 2013
collaterized by 12,000,000 shares of the Company's common stock
(5)
|
771,659 | - | ||||||
5,965,500 | 3,814,370 | |||||||
Less
Current Portion
|
(22,444 | ) | (39,702 | ) | ||||
$ | 5,943,056 | $ | 3,774,668 |
Principal
maturities for long-term debt are as follows for the years ended July
31:
2011
|
$ | 22,444 | ||
2012
|
4,252,379 | |||
2013
|
789,518 | |||
2014
|
18,789 | |||
2015
|
19,768 | |||
Thereafter
|
862,602 | |||
$ | 5,965,500 |
(1) In
November 2007, the Company refinanced a loan on its North Carolina building. The
loan is with Bayview Loan Servicing, LLC. Effective March 31, 2010 the Company
entered into a stipulation agreement with Bayview Loan Servicing, LLC that
reduced the current monthly payment to $5,349, including interest. In 2013,
Bayview Loan Servicing LLC may step up the interest rate at that time. The
loan is set to mature on March 31, 2038. Effective April 1, 2012, the
interest rate adjusts to Prime plus 4.875%. Interest rate changes are limited to
2% increase or decrease in any annual adjustments. Interest expense for the year
ended July 31, 2010 and 2009 for Bayview Loan Servicing, LLC was $95,286 and
$107,083. respectively.
30
(2) On
May 5, 2008, the Company entered into a loan agreement with Crystal Capital
Ventures Inc. (“Crystal Capital”). The loan agreement provides for loans to the
Company of up to $3,000,000, with a minimum initial loan of $500,000 taking
place on May 19, 2008. The loans bear interest payable monthly in arrears at the
rate of 10% per annum, and mature and are payable on May 4, 2012. The loan under
the loan agreement is secured by shares of the Company’s common stock held by
Crystal Capital. The Company is required to issue shares as collateral at the
rate of two and one half shares of the Company’s common stock for each dollar
principal amount of the loan advanced to the Company. Following
disbursement of the first $1,000,000 of funds pursuant to the loan agreement, on
May 27, 2008, the Company issued 2,500,000 shares of common stock as collateral
to Crystal Capital. After the 1:3 reverse stock split in February 2009 the
Company issued Crystal an additional 5,000,000 shares to make their shares held
as collateral total 7,500,000. Pursuant to the anti-dilution provisions in the
Crystal Capital Ventures loan agreement with the 1:2 reverse stock split of
February 1, 2010 the Company issued 3,749,999 shares to Crystal Capital Ventures
so they again hold 7,500,000 post reverse stock split shares. In
connection with the Company's 20% stock dividend, the Company issued an
additional 1,500,000 common shares to be held as collateral.
As of
July 31, 2010, the Company has borrowed the full $3,000,000 under the loan
agreement from Crystal Capital. Interest expense to Crystal Capital was $341,676
for the year ended July 31, 2010 and $202,007 for the year ended July 31, 2009,
respectively. The Company is now current with the loan.
(3) On
February 28, 2010 the Company financed a liability policy ( workman’s
compensation) with Allegiance Direct Bank for the period February 28, 2010 to
February 28, 2011 for $13,351. The Company was required to make a down payment
of $3,351.15 in February 2010 and monthly payments including interest of 9.4%.
Interest expense for the years ended July 31, 2010 and 2009 paid to Allegiance
Direct Bank is $565 and $0, respectively.
(4) On
February 26, 2010 the Company entered into a loan agreement with Frontline Asset
Management Inc. The loan provides for payments to the Company of $2,000,000, of
which $1,235,404 has been advanced as of July 31, 2010, with interest at a fixed
annual rate of 12%. On May 1, 2010 an Addendum to the original Promissory Note,
dated February 26, 2010, amended the term of the note to state interest only
payments, due on the last day of every month until maturity date March 1, 2012
when all principal and accrued interest shall be due and payable. Interest
expense for the year ended July 31, 2010 was $42,341.
(5) On
April 15, 2010 the Company entered into a loan agreement for $2,000,000 with
Winsor Capital Inc. The loan provides for payments of up to $2,000,000 to the
Company with an initial installment of $250,000 and additional installments of
up to $1,750,000 with a 10% interest rate. The entire loan amount is secured by
12,000,000 shares of the Company common stock. Each loan installment matures
three years from issuance of the installment. The loan has an anti-dilution
clause for the stocks issued. Stock is issued and delivered proportionately to
the delivery of funds. Interest expense for the year ended July 31, 2010 was
$19,139.
Note
10. Stockholders’ Equity
On
January 15, 2009, the Company’s shareholders approved a 1:3 reverse stock split
for the outstanding shares but it did not take effect until February 19, 2009.
Common stock, authorized shares was 35,714,285 and was increased to 50,000,000
on February 19, 2009. On February 20, 2009, the Company issued Wyndom Capital
Investments, Inc. an additional 6,666,665 shares as collateral for a loan that
in June 2009 went into default and the share collateral for which was taken by
the lender. Crystal Capital Ventures Inc. was issued 4,999,999 shares so they
again hold 7,500,000 post reverse stock split shares as of February 20, 2009, as
collateral for a loan of up to $3,000,000 as discussed in Note 5.
On
February 1, 2010 the Company effected a 1:2 reverse stock split. Pursuant to the
anti-dilution provisions in the Crystal Capital Ventures loan agreement issued
3,749,999 shares to Crystal Capital Ventures so they again hold 7,500,000 post
reverse stock split shares. Concurrent with the 1:2 reverse stock split the
authorized shares were also reduced from 50,000,000 to 25,000,000 shares. By
motion of the Board, May 17, 2010 the authorized were increased from 25,000,000
common shares to 100,000,000 common shares.
Except
for the presentation of common shares authorized and issued on the consolidated
balance sheet and shares presented in the consolidated statement of
stockholders’ equity (deficit), all shares and par share information has been
revised to give retroactive effect to the reverse stock splits.
31
Note
11. Net Loss Per Common Share
Loss per
share is computed based on the weighted average number of shares outstanding
during the year. Diluted loss per common share is computed by dividing net loss
by the weighted average number of common shares and potential common shares
during the specified periods.
The
following table sets forth the reconciliation of the basic and diluted net loss
per common share computations for the years ended July 31, 2010 and
2009.
Years
Ended
|
||||||||
July
31,
|
||||||||
2010
|
2009
|
|||||||
Basic
and Diluted EPS:
|
||||||||
Net
Loss Ascribed to Common Shareholders - Basic and Diluted
|
$ | (3,933,604 | ) | $ | (6,817,974 | ) | ||
Weighted
Average Shares Outstanding - Basic and Diluted
|
17,986,016 | 10,278,989 | ||||||
Basic
and Diluted Net Loss Per Common Share
|
$ | (0.22 | ) | $ | (0.66 | ) |
Net loss
per common share for the year ended July 31, 2009 has been revised. This
revision was immaterial to the Company’s consolidated results of operations and
financial position. See below for further discussion. All share and per share
amounts have been restated to reflect the 1:3 and the 1:2 reverse stock split as
discussed in Note 10.
The
amounts previously reported for the year ended July 31, 2009 were as
follows:
Year
Ended
|
||||
July
31, 2009
|
||||
Basic
and Diluted Loss Per Common Share
|
$ | (0.33 | ) | |
Weighted
Average Number of Shares
|
||||
Outstanding
-Basic and Diluted
|
20,558,046 |
Note
12. Share Based Compensation
The
Company records compensation expense in its consolidated statement of operations
related to employee stock-based options and awards in accordance with FASB ASC
718, “Compensation”, and (“ASC 718”).
The
Company recognizes the cost of all employee stock options on a straight-line
attribution basis over their respective contractual terms, net of estimated
forfeitures. The Company has selected the modified prospective method of
transition.
Stock
Dividend
On April
20, 2010 the Board of Directors approved a 20% restricted stock dividend for the
holders of our common stock, consisting of one share of common stock for each
five shares held of record on the May 28, 2010 record date.
Increase
in Authorized Common Stock
On
April 7, 2010, the Company’s board of directors approved an amendment to our
Articles of Incorporation to increase the authorized number of shares of common
stock from 25,000,000 shares, par value $.001 per share, to 100,000,000 shares,
par value $.001 per share. The Company thereafter received the written consent
from a shareholder of our company holding a majority (51.58%) of the outstanding
shares of our common stock on April 8, 2010. The Company filed the amendment
with the Secretary of State on Nevada on May 4, 2010, after mailing a Definitive
Information Statement to our stockholders and the amendment was effective May
17, 2010.
32
Stock
Option Plan
As of
July 31, 2010, there are no shares of common stock remaining and available for
issuance under the stock option plans.
A summary
of the option activity under the Company’s stock option plan as of July 31, 2010
and 2009.
Option
|
Options
|
Weighted
Average
Exercise
Share
Price
|
Weighted
Average
Remaining
Contractual
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding
at August 1, 2008
|
55,845 | $ | 1.80 | - | $ | - | ||||||||||
Options
Granted
|
1,000,000 | $ | 1.80 | $ | - | |||||||||||
Options
Exercised
|
(713,345 | ) | $ | 1.80 | - | $ | - | |||||||||
Outstanding
at July 31, 2009
|
342,500 | $ | 1.80 | - | $ | - | ||||||||||
Options
Granted
|
500,000 | $ | 0.70 | - | $ | - | ||||||||||
Options
Exercised
|
(842,500 | ) | $ | 1.15 | - | $ | - | |||||||||
Options
Cancelled/Expired
|
- | $ | - | - | $ | - | ||||||||||
Outstanding
at July 31, 2010
|
- | $ | - | - | $ | - | ||||||||||
Exercisable
at July 31, 2010
|
- | $ | - | - | $ | - |
Employee
stock compensation expense applicable to stock options for the years ended July
31, 2010 and 2009 was $0 and $0, respectively. The aggregate intrinsic value of
options outstanding as of July 31, 2010 was $0.
The
Company established the 2009 Restricted Stock Plan (“the 2009 Plan”) in
February, 2009 and filed an S-8 Registration Statement with the Securities and
Exchange Commission that was declared effective. The 2009 Plan allows the
Company's Board of Directors to issue up to 3,000,000 common shares pursuant to
the 2009 Plan as compensation for services by employees and non-employees to the
Company. The Company's Board of Directors has the discretion to set the price,
vesting schedules and other terms and conditions for options granted under the
2009 Plan.
During
the years ended July 31, 2010 and 2009, the Company granted 500,000 and
1,000,000 options, respectively with an option price of $0.70 and $1.80 per
share, respectively, to various consultants. During the years ended July 31,
2010 and 2009, 500,000 and 4,315,000 options, respectively, were vested at the
fair market value of which was determined under the Black-Scholes formula to be
approximately $70,000 and $2,630,000 and is included in general and
administrative expenses. During the years ended July 31, 2010 and 2009,1,185,000
and 713,345 options were exercised, respectively valued at $1.15 and $1.80 per
share.
33
A summary
of the Company’s Restricted Stock Plans follows:
Authorized
Options and UnGranted:
|
Number
of Shares
|
|||
Balance
August 1, 2008 (2006 Plan)
|
57,417 | |||
Options
Authorized (2006 Plan)
|
- | |||
Options
Granted (2006 Plan)
|
(57,417 | ) | ||
Options
Cancelled/Expired (2006 Plan)
|
- | |||
Options
Authorized (2009 Plan)
|
1,500,000 | |||
Options
Granted (2009 Plan)
|
(1,000,000 | ) | ||
Options
Cancelled/Expired (2009 Plan)
|
- | |||
Balance
July 31, 2009 (2009 Plan)
|
500,000 | |||
Options
Granted (2009 Plan)
|
(500,000 | ) | ||
Options
Cancelled/Expired (2009 Plan)
|
- | |||
Balance
July 31, 2010 (2009 Plan)
|
- |
During
the years ended July 31, 2010 and 2009, total related advances converted in
return for the exercise of options under the plan amounted to approximately
$976,000 and $1,287,000, respectively.
Note
13. Income Taxes
The
Company adopted the provisions of ASC 740, “Income Taxes” (“ASC 74”) on August
1, 2007. The implementation of ASC 740 did not impact the total amount of the
Company’s liabilities for uncertain tax position.
The
Company recorded no provisions for income taxes for the years ended July 31,
2010 and 2009.
A
reconciliation of taxes on income computed at federal statuary rate to the
amount provided is as follows:
Years
Ended
|
||||||||
July
31,
|
||||||||
2010
|
2009
|
|||||||
Tax
Provisions Computed at Federal Statuary Rate of 35%
|
||||||||
Continuing
Operations
|
$ | (1,376,761 | ) | $ | (2,378,818 | ) | ||
Increase
(Decrease) in Taxes Resulting From:
|
||||||||
Unused
Operating Losses
|
1,376,761 | 2,378,818 | ||||||
$ | - | $ | - |
34
Components
of deferred income tax assets are as follows:
Years
Ended
|
||||||||
July
31,
|
||||||||
2010
Tax
Effect
|
2009
Tax
Effect
|
|||||||
Deferred
Tax Assets - Current:
|
||||||||
United
States Net Operating Loss
|
$ | 21,937,579 | $ | 20,560,818 | ||||
Valuation
Allowances
|
(21,937,579 | ) | (20,560,818 | ) | ||||
$ | - | $ | - |
The net
operating loss carry forward as of July 31, 2010 is approximately $62.7 million
and will expire in years through 2024.
Note
14. Commitments and Contingencies
Lease
Agreement
Our
principal executive office is located at 5413 Rusty Anchor Court, Las Vegas, NV
89130. We lease approximately 1,900 square feet under a lease agreement that
commenced in March 2008 and renews on an annual basis. The lease provides for an
aggregate annual payment of $18,000. We believe our current facilities will
generally be adequate for our needs for the foreseeable future.
Effective
April 16, 2008, SPI agreed to lease approximately 5,000 square feet of space in
the Company’s North Carolina facility at a rental rate of $2,500.00 per month
and the monthly rental to be escalated five (5%) percent annually beginning
April 16, 2009. The leased space is suitable for, and utilized by SPI for,
SPI’s developmental and manufacturing operations for licensed products pursuant
to the License Agreement. The leased space is leased on a month-to-month basis
at a current monthly rental of $2,756. Although the lease was signed, the space
is only 80% completed as of July 31, 2010. The Company also entered into a month
to month lease agreement for $750 with SPI for renting offices in the Company’s
Las Vegas corporate office.
Total
rental income for the years ended July 31, 2010 and 2009 was $40,894 and
$39,000, respectively.
License
Agreement
Effective
May 28, 2010 the Company entered into a 10 year license agreement with Lithium
Electric Vehicle Corp. (“LEVC”) providing for the Company to license to LEVC
certain of the Company’s patent applications and technologies for electric
vehicles and other applications. The purpose of the licensee is to expand sales
of the Company’s current line of products by the manufacture and sale of such
products in Canada, which is LEVC’s exclusive territory under the license
agreement. LEVC agreed to pay the Company $2 million dollars over the initial
two year term with the option to extend the agreement on an annual basis for an
additional $500,000 per year. The revenue earned from the license
agreement is amortized over the two year period and for the year ending July 31,
2010, the Company recognized income of $83,333 with $583,333 being
deferred.
In
connection with the license agreement, LEVC agrees to pay the Company a royalty
on each and every licensed product sold or distributed by LEVC. The
royalty is due within ten days of each calendar quarter.
Surety
Bond
The
Company applied to North Carolina Department of Motor Vehicles for a
manufacturing license. This application required a surety bond of $50,000 for
three years which the Company acquired from Kaercher Campbell & Associates.
The Company is licensed as a motor vehicle dealer to engage in the business of
selling motor vehicles by the State of North Carolina DMV. The Company's
license is effective through March 31, 2011.
35
Legal
Proceedings
The
Company is currently involved in various claims and legal proceedings.
Quarterly, the Company reviews the status of each significant matter and
assesses its potential financial exposure and if the potential loss from any
claim or legal proceeding is considered probable and the amount can be
reasonably estimated, the Company accrues a liability for the estimated
loss.
An
arbitration award in the amount of $70,803 was awarded to Keith Boucher, a
former consultant for the Company. against the Company for attorney’s fees and
costs incurred in arbitration. A Judgment has been awarded to Keith
Boucher. The parties have agreed upon a monthly payment
and anticipates it will be paid in full by June 2011.
Barrett
Lyon, an individual, has filed suit against the Company in the Superior Court of
California, San Mateo County, for alleged breach of warranty for a vehicle he
purchased from the Company seeking $150,000 in damages, which includes
attorney’s fees. The Company has disputed his claims; however, on
September 15, 2010 the Company has reached settlement agreement with Mr. Lyon
and paid Mr. Lyon $75,000 in full settlement.
F&C
Promptly, Inc., a collection agency, filed in February 2009 a lawsuit against
the Company in the District Court, Clark County, Nevada, for approximately
$32,000 for collection of the account of the Law Offices of Richard McKnight
assigned to F&C Promptly, Inc. for collection. The Company has come to
an agreement with F&C Promptly, Inc. and has agreed to $4,000 a month
payment until paid in full. The Company expects this to be paid in full by
November 2010.
Caudle
& Spears has obtained a default judgment against the Company in Meckenberg
County, North Carolina, General Court, in the amount of $17,686. This law firm
represented us in our litigation against Martin Koebler, a former employee, whom
we successfully sued for return of Company property and other damages. The
Company is in settlement negotiations with Caudle & Spears, since its
judgment against Martin Koebler is still in the collection process. A payment
agreement has been reached in the amount of $2,500 per month with no interest
until paid. The Company has been making payments and expects this to be
paid in full by November 2010.
Javad
Hajihadian, an individual , had ordered and paid for, the first super car to be
produced by Li-ion Motors in November 2008. The car was in the design stage when
it was ordered; with the understanding it would be a minimum of one year before
the car would be manufactured. The client has changed his mind and his
attorney contact the company to cancel his contract and have his payment refund.
The parties have reached an agreement and the payment is being refunded with
interest. The settlement agreement was for $102,500 and stipulated monthly
payments of $10,250 commencing in July 2010. The initial two payments were
paid to Mr. Hajihadian in August 2010. The Company has made the subsequent
required payments.
Note
15. Automotive X Prize
The Progressive
Insurance Automotive X-Prize, (“PIAXP”), competition was announced in April 2008
as a way to spur the development of clean, high-mileage vehicles, and is funded
for a total of $10 million, which will be divided among three separate
categories. The X-Prize challenge drew an unexpectedly strong response; 115
teams entered 136 separate vehicles, winners were announced in Washington D.C.
on September 15, 2010 and the Company was the winner in its entry class. On
October 27, 2010, the Company received $2.5 million from XPrize and will record
the amount as other income in the Company’s subsequent consolidated statement of
operations.
Note
16. Subsequent Events
Subsequent
events have been evaluated through November 1, 2010.
Item
9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure.
None.
Item
9A (T). 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 Securities Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our management, including our chief executive and financial
officer, to allow timely decisions regarding required disclosure. In designing
and evaluating the disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
as ours are designed to do, and management necessarily was required to apply its
judgment in evaluating the cost- benefit relationship of possible controls and
procedures.
36
As of
July 31, 2010, an evaluation was performed under the supervision and with the
participation of our management, including our Chief Executive Officer and
Principal Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures. Based upon that evaluation, our Chief
Executive Officer and Principal Financial Officer concluded that our disclosure
controls and procedures were ineffective as a result of a significant
deficiencies and material weaknesses as discussed in the following
paragraph.
The
reportable conditions identified relate to failure to properly track compliance
with two loan agreements to which we were party in the years ended July 31, 2010
and 2009. We have implemented certain procedures to ensure that financial
transactions relating to payments on outstanding debt are properly recorded,
documented and reviewed as to compliance with the particular loan agreement, for
purposes of disclosure in our financial statements.
Management's
Annual Report on Internal Control over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange
Act. Internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.
Management
assessed the effectiveness of internal control over financial reporting as of
July 31, 2010. We carried out this assessment using the criteria of the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control—Integrated Framework.
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.
Management's
report was not subject to attestation by our registered public accounting firm,
pursuant to temporary rules of the Securities and Exchange Commission that
permit us to provide only management's report in this annual report. Management
concluded in this assessment that, as of July 31, 2010, given the above
reportable conditions, our internal control over financial reporting was
effective.
There
have been no significant changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act)
during
the fourth quarter of our 2010 fiscal year that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Limitations on
the Effectiveness of Controls
A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within a company have been detected. The Company's disclosure
controls and procedures are designed to provide reasonable assurance of
achieving its objectives. The Company's Chief Executive Officer and Principal
Financial Officer concluded that the Company's disclosure controls and
procedures are effective at that reasonable assurance level.
Item
9B. Other Information.
None.
PART
III
Item
10. Directors, Executive Officers, and Corporate Governance.
Our
executive officers and directors and their respective ages as of October 30,
2010 are as follows:
37
Name
|
Age
|
Position
|
||
Stacey
Fling
|
51
|
Chief
Executive Officer, President and Director
|
||
Holly.
Roseberry
|
|
58
|
|
Director
|
Our Board
of Directors consists of two directors. The following information with respect
to the principal occupation or employment of each officer and director, the
principal business of the corporation or other organization in which such
occupation or employment is carried on, and such person's business experience
during the past five years, has been furnished to the Company by the respective
officers and director:
Stacey
Fling has
been the President of A & S Holdings, Inc., since 2003, a real estate
investment and development company located in Las Vegas, NV. Prior to
2003, Ms. Fling managed the administrative offices of an environmental
remediation and monitoring company with offices in San Diego, California, as
well as in Las Vegas, Nevada.
Holly
Roseberry was appointed as
our secretary, treasurer and chief
financial officer February 2002. On November 15, 2002, she
resigned from these positions and was appointed as our President, Chief
Executive Officer and as a Director. On May 1, 2009, she resigned
from all offices held with the Company while agreeing to continue as a Director.
From 2001 to 2003, she managed the Azra Shopping Center.
She obtained a Bachelor of Arts degree from Sacred Heart University in
Bridgeport, Connecticut in 1973. Ms. Roseberry was employed from 1993 to 1996 as
human resources
manager, and
from 1997 to 1999
as business office manager, for a
Las Vegas Wards Department Store. Ms. Roseberry has held the
positions of President, Chief Executive Officer and a Director of our former
majority-owned subsidiary, Zingo, Inc. August 30, 2005 to June 4, 2008. Ms
Roseberry now consults with the Company providing her experience.
Term
of Office
Our
directors are appointed for a one-year term to hold office until the
next annual general meeting of our shareholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our
board of directors and hold office until removed by the board.
Committees
We do not
have any committees of the Board of Directors. We intend to have an audit
committee; the sole member of our audit committee, Brian Newman, resigned on May
1, 2009.
Corporate
Code of Conduct
We have
adopted a corporate code of conduct, which provides for
internal procedures concerning the reporting and disclosure of corporate matters
that are material to our business and to our stockholders. The corporate code of
conduct includes a code of ethics for
our officers and employees as to
workplace conduct, dealings with customers, compliance
with laws, improper payments,
conflicts of interest, insider trading, company confidential
information, and behavior with honesty and integrity.
Significant
Employees
We have
no significant employees other than the officers described above.
Section
16(A) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the Company’s executive officers and
directors, and persons who beneficially own more than
ten percent of the
Company's equity securities, to
file reports of ownership and changes
in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish
the Company with copies of
all Section 16(a) forms they file. Based
on its review of the copies of such forms received by it,
the Company believes that during the
fiscal year ended July 31, 2010 all
such filing requirements applicable to its officers
and directors were complied with.
38
Item
11. Executive Compensation.
The
following table sets forth certain information as to the
Company's highest
paid executive officers and directors for
the Company's fiscal years ended
July 31, 2009, 2008 and 2007. No other compensation
was paid to any such officer or director other than the cash
compensation set forth below.
Summary Compensation
Table
Name
and Principal Position
|
Year
*
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in Pension Value
and
Nonqualified
Deferred
Commensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||||||||||||||
Stacey
Fling, President
|
2009
|
$ | 16,923 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 16,923 | |||||||||||||||||
2010
|
74,100 | - | - | - | - | - | - | 74,100 | ||||||||||||||||||||||||||
Holly
Roseberry, Director
|
2008
|
64,720 | - | - | - | - | - | - | 64,720 | |||||||||||||||||||||||||
2009
|
52,040 | - | - | - | - | - | 1,154 | 53,194 | ||||||||||||||||||||||||||
2010
|
- | - | - | - | - | - | - | - |
* Years
ended July 31, 2010, 2009 and 2008.
** Holly Roseberry
held the office of President from November 15, 2002 to May 1, 2009.
Option/SAR
Grants in Last Fiscal Year
There
were no grant of options to purchase our common stock to our officers or
directors in fiscal 2010, and there were no exercises of such options during or
options held at the end of such fiscal year by officers or
directors.
Directors’
Compensation
The
following table shows compensation paid to our directors in the fiscal year
ended July 31, 2010.
Director
Compensation
Name
|
Fees
Earned
or
Paid in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|||||||||||||||||||||
Stacey
Fling
|
$ | 12,000 | $ | 12,000 | ||||||||||||||||||||||||
Holly
Roseberry
|
$ | 30,090 | $ | 30,090 |
* Stacey
Fling has acted as a director since May 1, 2009; Mehboob Charania resigned as a
director on November 28, 2008; Brian Newman resigned as a director on May 1,
2009; Gregory Navone resigned as a director on July 10, 2009; and Holly
Roseberry commenced service as a Director on November 15, 2002.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The
following table sets forth certain information concerning the number
of shares of our common stock owned beneficially as
of October 28, 2010, by: (i) each
person (including any group) known to us to own more than
five percent (5%) of any class of
our voting securities, (ii) each of
our directors, and (iii)officers and directors as a group.
Unless otherwise indicated, the shareholders
listed possess sole voting
and investment power with respect to the shares
shown.
39
Title
of Class
|
Owner
|
Number
of
Shares
of
Common
Stock
|
Percentage
of
Outstanding
|
|||||||
Common
Stock
|
||||||||||
Stacey
Fling, President and Chief Executive Officer
|
107 | * | ||||||||
4933
W. Cragi Road
|
||||||||||
Las
Vegas, NV 89130
|
||||||||||
Holly
Roseberry, Director
|
107 | * | ||||||||
1260
North Sloan Lane
|
||||||||||
Las
Vegas, NV 89110
|
||||||||||
All
Officers and Directors
|
214 | * | ||||||||
Directors
as a Group (2 persons)
|
||||||||||
Crystal
Capital Venture
|
9,000,000 | 29.95 | % | |||||||
1274
Sundial Avenue
|
||||||||||
Coral
Grove
|
||||||||||
P.O.
BOX 2135
|
||||||||||
Belize
City, Belize
|
||||||||||
Rocamar
Invest, Ltd.
|
1,504,287 | 5 | % | |||||||
2502
- 1331 W. Georgia Street
|
||||||||||
Vancouver,
BC Canada V6E 4P1
|
||||||||||
Winsor
Capital. Inc.
|
12,000,000 | 39.93 | % | |||||||
35
New Road, #2112
|
||||||||||
Belize
City, Belize
|
* Less than 1%
(1)
|
As
of October 15, 2010, there were 30,047,301 shares of
our common stock issued and
outstanding.
|
Change
in Control
We are
not aware of any arrangement that might result in a change in control in the
future.
Item 13. Certain Relationships and
Related Transactions, and Director Independence.
The
Company received additional advances of $1,252,014 and repaid $1,349,955 in the
form of cash, common stock, and two Li-ion manufactured electric vehicles from
Salim Rana Investments (“SSRI”) , a former shareholder, for the year
ended July 31, 2010. During fiscal year ended July 31, 2009, the Company
received $2,123,399 and repaid $2,063,458. As of July 31, 2010 and 2009,
the amount due to SSRI was $0 and $97,940, respectively.
The
Company did not receive or repay advances from Greg Navone (former Director of
the Company) during the year ended July 31, 2010. During the year ended July 31,
2009, the Company received and repaid $51,000. Mr. Navone resigned as
a director of the Company on July 10, 2009. The Company owes director fees
to Mr. Navone in the amount of $5,915.
40
Effective
April 15, 2008, the Company entered into a License
Agreement (“License Agreement”) with Superlattice Power, Inc.
(“SPI”) providing for their license to Superlattice of their patent applications
and technologies for rechargeable lithium ion batteries for electric vehicles
and other applications (“Licensed Products”). Under the License Agreement,
the Company has the right to purchase their requirements of lithium ion
batteries from Superlattice, and their requirements of lithium ion batteries
shall be supplied by Superattice in preference to, and on a priority basis as
compared with, supply and delivery arrangements in effect for other customers of
SPI. The Company’s cost for lithium ion batteries purchased from SPI shall be
SPI’s actual manufacturing costs for such batteries for the fiscal quarter of
SPI in which the Company’s purchase takes place. On May 25, 2010 the license
agreement was amended to reflect SPI’s territory would only be the United
States, U.S. possessions and territories and we can
license other companies in other parts of the world. We have issued a license to
a firm for the rights in Canada.
Under the
terms of the license agreement, SPI has agreed to invest a minimum of $1,500,000
in each of the first two years in development of the technology for the Licensed
Products. To date, SPI has not met the minimum requirements in the development
of technology, and therefore, is not in compliance with its obligations under
this covenant of the license agreement. The Company has advised
SPI that we will not give notice of default against them for their
failure to comply with this covenant over the term of the License
Agreement.
Effective
April 16, 2008, SPI agreed to lease approximately 5,000 square feet of space in
the Company’s North Carolina facility at a rental rate of $2,500.00 per month
and the monthly rental to be escalated five (5%) percent annually beginning
April 16, 2009. The leased space is suitable for, and utilized by SPI for,
SPI’s developmental and manufacturing operations for licensed products pursuant
to the License Agreement. The leased space is leased on a month-to-month basis
at a current monthly rental of $2,756. Although the lease was signed, the space
is only 80% completed as of July 31, 2010. The Company also entered into a month
to month lease agreement for $750 with SPI for renting offices in the Company’s
Las Vegas corporate office.
Item
14. Principal Accountant Fees and Services.
Fiscal
2010
|
Fiscal
2009
|
|||||||
Audit
- Related Fees (1)
|
$ | 37,000 | $ | 30,000 | ||||
Tax
Fees (2)
|
- | - | ||||||
All
Other Fees
|
- | - | ||||||
Audit
committee pre-approval processes, percentages of
servicesapproved by audit
committee, percentage of hours spent on audit engagement by persons other
than principal accountant's full time employees.
|
N/A | N/A |
(1) Audit
Fees consist of fees billed for professional services rendered for the audit of
the Company’s consolidated annual financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by Madsen & Associates in connection with
statutory and regulatory filings or engagements.
(2) Tax
Fees consist of fees billed for professional services rendered for tax
compliance, tax advice and tax planning. These services include assistance
regarding federal and state tax compliance, international tax, research, and
unclaimed property services.
41
Item
15. Exhibits and Financial Statement Schedules.
Exhibit
No.
|
Description
|
|
3.1
|
Articles
of Incorporation of the Company.(Incorporated herein by reference to
Exhibit 3.1 to the Company's Registration Statement on Form SB-2, filed
with the Commission on May 29, 2001.)
|
|
3.1a
|
Certificate
of Amendment to Articles of Incorporation filed October 27, 2004.
(Incorporated by reference to Exhibit3.1a to the Company’s Current Report
on Form 8-K, filed with the Commission on November 2,
2004.)
|
|
3.1b
|
Form
of Restatement of Articles of Incorporation of the Company. (Incorporated
by reference to Exhibit 3.1a to the Company’s Quarterly Report on Form
10-QSB, filed with the Commission on December 15,
2004.)
|
|
3.1c
|
Certificate
of Amendment to Articles of Incorporation, filed effective March 9, 2005.
(Incorporated by reference to Exhibit 3.1c to the Company’s Annual Report
on Form 10-KSB, filed with the Commission on May 23,
2005.)
|
|
3.1d
|
Certificate
of Change, filed effective January 17, 2008. (Incorporated by reference to
Exhibit 3.1d to the Company’s Current Report on Form 8-K, filed with the
Commission on January 16, 2008.)
|
|
3.1e
|
Certificate
of Amendment to Articles of Incorporation, filed effective December 24,
2007, filed herewith.
|
|
3.1
|
Articles
of Incorporation of the Company.(Incorporated herein by reference to
Exhibit 3.1 to the Company's Registration Statement on Form SB-2, filed
with the Commission on May 29, 2001.)
|
|
3.1a
|
Certificate
of Amendment to Articles of Incorporation filed October 27, 2004.
(Incorporated by reference to Exhibit3.1a to the Company’s Current Report
on Form 8-K, filed with the Commission on November 2,
2004.)
|
|
3.1b
|
Form
of Restatement of Articles of Incorporation of the Company. (Incorporated
by reference to Exhibit 3.1a to the Company’s Quarterly Report on Form
10-QSB, filed with the Commission on December 15,
2004.)
|
|
3.1c
|
Certificate
of Amendment to Articles of Incorporation, filed effective March 9, 2005.
(Incorporated by reference to Exhibit 3.1c to the Company’s Annual Report
on Form 10-KSB, filed with the Commission on May 23,
2005.)
|
|
3.1d
|
Certificate
of Change, filed effective January 17, 2008. (Incorporated by reference to
Exhibit 3.1d to the Company’s Current Report on Form 8-K, filed with the
Commission on January 16, 2008.)
|
|
3.1e
|
Certificate
of Amendment to Articles of Incorporation, filed effective December 24,
2007. (Incorporated by reference to Exhibit 3.1e to the Company’s Annual
Report on Form 10-K, filed with the Commission on November 12,
2008.)
|
42
3.1f
|
Certificate
of Amendment to Articles of Incorporation, filed effective February 19,
2009.(Incorporated by reference to Exhibit 3.1f to the Company’s Current
Report on Form 8-K, filed with the Commission on February 27,
2009.)
|
|
3.1g
|
Certificate
of Merger with subsidiary, dated December 28, 2009, amending Articles of
Incorporation of Company to change the name of the Company to Li-ion
Motors Corp. (Incorporated by reference to Exhibit 3.1g to the Company’s
Current Report on Form 8-K, filed with the Commission on June 4,
2010.)
|
|
3.1h
|
Certificate
of Change, filed effective February 1, 2010. (Incorporated by reference to
Exhibit 3.1h to the Company’s Current Report on Form 8-K, filed with the
Commission on June 4, 2010.)
|
|
3.1i
|
Certificate
of Amendment to Articles of Incorporation, filed effective May 17, 2010.
(Incorporated by reference to Exhibit 3.1i to the Company’s Current Report
on Form 8-K, filed with the Commission on June 4,
2010.)
|
|
3.2
|
By-Laws
of the Company. (Incorporated herein by reference to Exhibit 3.2 to the
Company's Registration Statement on Form SB-2 filed with the Commission on
May 29, 2001.)
|
|
4.1
|
Specimen
Common Stock Certificate. (Incorporated herein by reference to Exhibit 4.1
to the Company’s Annual Report on Form 10-KSB, filed with the Commission
on November 8, 2006.)
|
|
4.2
|
Whistler
Investments, Inc. 2003 Restricted Stock Plan. (Incorporated herein by
reference to Exhibit 4.2 to the Company's Registration Statement on Form
S-8 filed with the Commission on July 18, 2003.)
|
|
10.3
|
Office
Services Agreement, dated May 1, 2000, between the Company and Dewey
Jones. (Incorporated herein by reference to Exhibit 10.3 to the Company's
Registration Statement on Form SB-2 filed with the Commission on May 29,
2001.)
|
|
10.4
|
Asset
Purchase Agreement dated April 10, 2002 between Salim S. Rana Investments
Corp. and Whistler Investments, Inc. (Incorporated by reference to Exhibit
No. 10.1 to the Company's Annual Report on Form 10-KSB, filed with the
Commission on May 6, 2002.)
|
|
10.5
|
Agreement
dated January 1, 2003 between Whistler Investments, Inc. and Kim Larsen
respecting the disposition of Azra Shopping Center. (Incorporated by
reference to Exhibit 10.1 to the Company's Amendment No. 1 to its Annual
Report on Form 10-KSB filed May 8, 2003)
|
|
10.6
|
Amendment
to Licensing Agreement, dated October 21, 2003, between Nu Age Electric
Inc. and Whistler Investments, Inc. (Incorporated by reference to Exhibit
10.3 to the Company's Current Report on Form 8-K, filed with the
Commission on November 21,
2003.)
|
43
10.7
|
Agreement
dated October 21,2003, by and between RV Systems, Inc. and Whistler
Investments, Inc. (Incorporated by reference to Exhibit 10.4 to the
Company's Current Report on Form 8-K, filed with the Commission on
November 21, 2003.)
|
|
10.8
|
Investment
Agreement, dated as of January 19, 2004, by and between Whistler
Investments, Inc. and Dutchess Private Equities Fund, L.P. (Incorporated
by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K,
filed with the Commission on January 23, 2004.)
|
|
10.9
|
Registration
Rights Agreement dated as of January 19, 2004, by and between Whistler
Investments, Inc. and Dutchess Private Equities Fund, L.P. (Incorporated
by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K,
filed with the Commission on January 23, 2004.)
|
|
10.10
|
Stock
Redemption and Reissuance Agreement, dated as of February 10, 2004,
Between Whistler Investments, Inc. and Salim S. Rana Investments, Inc.
(Incorporated by reference to Exhibit 10.10 to Amendment No. 1 to the
Company’s Annual Report on Form 10-KSB, filed with the Commission on
October 4, 2004.)
|
|
10.11
|
Letter
from City of Austin, Texas, dated February 27, 2004. (Incorporated by
reference to Exhibit 10.11 to Amendment No. 1 to the Company’s Annual
Report on Form 10-KSB, filed with the Commission on October 4,
2004.)
|
|
10.12
|
Memorandum
of Understanding, dated March 15, 2004, between Shanghai Geely Metop
International and the Global Electric 21 subsidiary of Whistler
Investments, Inc. (Incorporated by reference to Exhibit 10.12 to Amendment
No. 1 to the Company’s Annual Report on Form 10-KSB, filed with the
Commission on October 4, 2004.)
|
|
10.13
|
Loan
Agreement, made as of the 20th day of February, 2004, among Sterling
Capital Inc. and Whistler Investments, Inc. (Incorporated by reference to
Exhibit 10.13 to Amendment No. 1 to the Company's Annual Report on Form
10-KSB, filed with the Commission on October 4, 2004.)
|
|
10.14
|
Letter
Agreement, dated February 3, 2004, between Whistler Investments, Inc. and
RV Systems, Inc. (Incorporated by reference to Exhibit 10.14 to Amendment
No. 1 to the Company's Annual Report on Form 10-KSB, filed with the
Commission on October 4, 2004.)
|
|
10.15
|
Purchase
and Sale Agreement, made effective as of the 3rd day of December, 2004,
between WhistlerTel, Inc. and Trade Winds Telecom, LLC. (Incorporated by
reference to Exhibit 10.15 to the Company's Current Report on Form 8-K,
filed with the Commission on December 8, 2004.)
|
|
10.16
|
Bill
of Sale and Assignment, dated as of December 3, 2004, between Trade Winds
Telecom LLC and Whistlertel,Inc. (Incorporated by reference to Exhibit
10.16 to the Company's Current Report on Form 8-K, filed with the
Commission on December 8, 2004.)
|
|
10.17
|
Agreement
and Plan of Reorganization, dated as of August 18, 2005, among the
Company, Whistlertel, Inc. and Javakingcoffee, Inc. (Incorporated by
reference to Exhibit 10.17 to the Company's Current Report on Form 8-K,
filed with the Commission on August 24, 2005.)
|
|
10.18
|
Notice,
dated July 2, 2005, from EV Innovations, Inc. To RV Systems, Inc.
(Incorporated by reference to Exhibit10.18 to the Company’s Annual Report
on Form 10-KSB, filed with the Commission on October 26,
2005.)
|
44
10.19
|
Non-reimbursable
Space Act Agreement between National Aeronautics and Space
Administration, John F. Kennedy Space Center and EV Innovations,
Inc. (Incorporated by reference to Exhibit 10.19 to the Company's
Quarterly Report on Form 10-QSB, filed with the Commission on March 17,
2006.
|
|
10.20
|
Agreement
dated March 30, 2006 between Paratransit, Inc. and the Company.
(Incorporated herein by reference to Exhibit 10.20 to the Company’s
Annual Report on Form 10-KSB, filed with the Commission on November 8,
2006.)
|
|
10.21
|
Request
for Pilot Approval, submitted May 31, 2006, to New York City
Taxi and Limousine Commission by the Company. (Incorporated herein by
reference to Exhibit 4.1 to the Company's Annual Report on Form 10-KSB,
filed with the Commission on November 8, 2006.)
|
|
10.22
|
Consulting
Agreement, dated March 26, 2007, between Hybrid Technologies, Inc.
and Griffen Trading Company.(Incorporated by reference to Exhibit 10.22 to
the Company’s Quarterly Report on Form 10-QSB, filed with the
Commission on June 19, 2007.)
|
|
10.23
|
Loan
Agreement, dated as of October 29, 2007, between Wyndom Capital
Investments, Inc. and the Company.(Incorporated by reference to Exhibit
10.23 to the Company’s Annual Report on Form 10-KSB, filed with
the Commission on November 13, 2007.)
|
|
10.24
|
Form
of Note issuable pursuant to the Loan Agreement, dated October 29,
2007, between Wyndom Capital Investments, Inc. and the Company, filed
herewith. (Incorporated by reference to Exhibit 10.24 to the
Company’s Annual Report on Form 10-KSB, filed with the Commission on
November 13, 2007.)
|
|
10.25
|
Stock
Purchase Agreement, dated as of April 15, 2008, between the Company
and Blue Diamond Investments, Inc.(Incorporated by reference to Exhibit
10.25 to the Company’s Current Report on Form 8-K, filed with the
Commission on April 21, 2008.)
|
|
10.26
|
License
Agreement, dated April 15, 2008, between the Company and Zingo, Inc.
(now Superlattice Power, Inc.).(Incorporated by reference to Exhibit 10.25
to the Company’s Current Report on Form 8-K, filed with the
Commission on April 21, 2008.)
|
|
10.27
|
Loan
Agreement, dated as of May 5, 2008, between Crystal Capital Ventures
Inc. and the Company. (Incorporated by reference to Exhibit 10.27 to
the Company’s Current Report on Form 8-K, filed with the Commission
on June 6, 2008.)
|
|
10.28
|
Form
of Note issuable pursuant to the Loan Agreement, dated May 5, 2008,
between Crystal Capital Ventures Inc. and the Company. (Incorporated
by reference to Exhibit 10.28 to the Company’s Current Report on Form
8-K, filed with the Commission on June 6, 2008.)
|
|
10.29
|
Letter
to the Superlattice Power, Inc., dated October 1, 2009, waiving
default under April 14, 2008 License Agreement, filed
herewith.
|
|
10.30
|
Loan
Agreement, dated as of April 15, 2010, between Winsor Capital Inc. and the
Company. (Incorporated by reference to Exhibit 10.30 to the Company’s
Current Report on Form 8-K, filed with the Commission on April 21,
2010.)
|
|
10.31
|
Form
of Note issuable pursuant to the Loan Agreement, dated April 15, 2010,
between Winsor Capital Inc. and the Company. (Incorporated by reference to
Exhibit 10.31 to the Company’s Current Report on Form 8-K, filed with
the Commission on April 21,
2010.)
|
45
10.32
|
License
Agreement, made effective May 28, 2010, between the Company and Lithium
Electric Vehicle Corp. (Incorporated by reference to Exhibit 10.32 to
the Company’s Current Report on Form 8-K, filed with
the Commission on June 4, 2010.)
|
|
10.33
|
Promissory
Note, payable to Frontline Asset Management, Inc., filed
herewith.
|
|
10.34
|
Amendment
to Promissory Note, dated October 11 , 2010, between the Company and
Frontline Asset Management, Inc., filed herewith.
|
|
10.35
|
Amendment,
dated as of October 11, 2010, to License Agreement, dated as of
May 28, 2010, by and between the Company and Lithium Electric Vehicle
Corp., filed herewith.
|
|
10.36
|
Amendment,
dated as of October 12, 2010, to Loan Agreement, dated as of May 5, 2008,
between the Company and Crystal Capital Investments, filed
herewith.
|
|
10.37
|
Amendment,
dated May 25, 2010, to License Agreement, dated April 14, 2008, between
the Company and Superlattice Power, Inc., filed
herewith.
|
|
31
|
Certification
of Chief Executive Officer and Principal Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
|
32
|
Certification
of Chief Executive Officer and Principal Financial Officer Pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed
herewith.
|
SIGNATURES
In accordance with Section
13 or 15(d) of the
Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
EV
INNOVATIONS, INC.
|
|||
Date:
November 2, 2010
|
By:
|
/s/ Stacey Fling
|
|
Stacey
Fling
|
|||
Chief
Executive Officer and Principal Financial Officer
|
In accordance with
the Securities Exchange Act, this report has
been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By:
|
/s/ Stacey Fling
|
||||
Stacey
Fling
|
|||||
President
and C.E.O.
|
|||||
(President,
Chief Executive Officer
|
|||||
Principal
Financial Officer and Director)
|
|||||
Date:
November 2, 2010
|
|||||
By:
|
/s/ Holly Roseberry
|
||||
Holly
Roseberry
|
|||||
(Director)
|
|||||
Date:
November 2, 2010
|
46