UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q 

 

☒ QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED September 30, 2014

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

GEI GLOBAL ENERGY CORP.

(Exact name of registrant as specified in its charter)

 

Nevada		333-171572		27-3429931
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(I.R.S. Employer Identification Number)

 

 Attn: K. J. Berry, Ph.D., P.E., Chairman and CEO

6060 Covered Wagons Trail

Flint, Michigan 48532

(Address of principal executive offices)

 

(810) 610-2816

 (Registrant’s telephone number, including area code)

 

Suja Minerals, Corp.

 (Former Name or Former Address, if Changes since Last Report)

 

Check 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 last 90 days.  YES ☒     NO ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐    NO ☒

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 1,227,497,954 shares of common stock as of November 17, 2014.

 

 

 

TABLE OF CONTENTS SEPTEMBER 30, 2014

 

		Page
PART I. - FINANCIAL INFORMATION
ITEM 1	FINANCIAL STATEMENTS	3
	Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013	3
	Unaudited Consolidated Statements of Comprehensive Loss for the three and nine month periods ended September 30, 2014 and September 30, 2013	4
	Unaudited Consolidated Statements of Cash Flows for the three and nine month periods ended September 30, 2014 and September 30, 2013	5
	Condensed Notes to Interim Consolidated Financial Statements	6
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	22
ITEM 4	Controls and Procedures	23
PART II	OTHER INFORMATION	23
ITEM 1A	Risk Factors	23
ITEM 3	Defaults Upon Senior Securities	25
ITEM 4	Mine Safety Disclosures	25
ITEM 5	Other Information	25
ITEM 6	Exhibits	25
INDEX TO EXHIBITS		25
SIGNATURES		26

 

 

GEI GLOBAL ENERGY CORP.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars)
		September 30,				December 31,
		2014				2013
		unaudited				audited
ASSETS:
Current Assets
Cash		$	31,053			$	5,553
Prepaid rent (Note 9)			-				5,075
Total Current Assets			31,053				10,628
Property and equipment, net (Note 3)			403,781				213,177
Restricted cash (Notes 3 and 10)			41,848				-
Debt issuance cost			167,419				-
Total Assets			644,101				223,805
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current Liabilities
Accounts payable		$	360,301			$	375,951
Accrued liabilities			189,906				286,867
Due to related party (Note 4)			251,888				249,703
Advances received (Note 6)			674,500				674,500
Convertible notes payable (Note 5)			437,466				500,000
Total Current Liabilities			1,914,061				2,087,021
Convertible notes payable (Note 5)			11,446				6,843
Total Liabilities			1,925,507				2,093,864
Description of business and going concern (Note 1)
Commitments (Note 9)
Subsequent events (Note 11)
Stockholders' Deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized;
2,500 issued and outstanding as of September 30, 2014 and December 31, 2013			50,000				50,000
Common stock, $0.001 par value, 8,000,000,000 shares authorized;
981,345,686 and 126,970 issued and outstanding as of
September 30, 2014 and December 31, 2013 (Note 7)			981,346				128
Stock issuable			3,169,153				1,451,838
Additional paid-in capital			6,841,927				325,314
Accumulated deficit			(12,323,832	)			(3,697,339	)
Total Stockholders' Deficit			(1,281,406	)			(1,870,059	)
Total Liabilities and Stockholders' Deficit		$	644,101			$	223,805

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

GEI GLOBAL ENERGY CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Expressed in U.S. dollars)
unaudited
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
REVENUE		$	-			$	-			$	-			$	-
OPERATING EXPENSES:
Selling, general, and administrative (Note 8)			607,430				154,675				3,120,336				308,317
Depreciation			3,048				4,150				9,144				6,721
Deferred financing expense			79,181				-				105,731				-
Consulting expense			236,747				-				1,891,328				-
Total operating expenses			926,406				158,825				5,126,539				315,038
OTHER (INCOME) EXPENSES
Other income			(20,924	)			-				(20,924	)			-
Interest expense (Note 5)			50,210				15,393				149,656				49,439
Total other expenses			29,286				15,393				128,732				49,439
NET LOSS		$	955,692			$	174,218			$	5,255,271			$	364,477
Deemed dividends			2,455,194				-				3,371,222				-
NET LOSS AND COMPREHENSIVE LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	3,410,886			$	174,218			$	8,626,493			$	364,477
NET LOSS PER COMMON SHARE:
Basic and diluted		$	0.00			$	1.83			$	0.01			$	4.45
Weighted average common shares
outstanding, basic and diluted			1,294,325,221				95,200				1,232,277,348				81,932

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

  

GEI GLOBAL ENERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
unaudited
		Nine Months Ended
		September 30,
		2014				2013
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net loss		$	(5,255,271	)		$	(364,477	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			9,144				6,721
Shares issued for services			4,500,523				-
Deferred financing expense			79,181				-
Accretion on convertible notes			123,666				-
Changes in operating assets and liabilities:
Prepaid rent			5,078				(20,300	)
Accounts payable and accrued liabilities			71,944				26,221
Net cash used in operating activities			(465,735	)			(351,835	)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Investment in property and equipment			(199,751	)			(166,967	)
Net cash used in investing activities			(199,751	)			(166,967	)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from convertible notes			715,801				-
Receipt from advances receivable			43,000				664,500
Advances from related party			47,200				2,500
Repayment of debt			(70,000	)			(35,429	)
Repayment to related party			(45,015	)			(97,945	)
Net cash provided by financing activities			690,986				533,626
INCREASE IN CASH			25,500				14,824
CASH, BEGINNING OF PERIOD			5,553				97
CASH, END OF PERIOD		$	31,053			$	14,921
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid		$	679			$	-
Income taxes paid		$	-			$	-

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

GEI GLOBAL ENERGY CORP.

Notes to the Consolidated Financial Statements

For the three and nine months ended September 30, 2014 and September 30, 2013

(unaudited)

(Expressed in U.S. dollars)

 

NOTE 1 – DESCRIPTION OF BUSINESS AND GOING CONCERN

 

GEI Global Energy Corp., formerly Suja Minerals Corp. (the “Company”) was incorporated in the State of Nevada on April 28, 2010. The Company’s principal business activity is the construction and sale of fuel cell auxiliary electric power generation systems for residential, commercial, military, and industrial electric applications.  These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at September 30, 2014, the Company has a working capital deficiency of $1,883,008 and has accumulated losses of $12,323,832 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 2 – BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Global Energy Innovations, Inc.

 

These interim consolidated unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2013, included in the Company’s Annual Report on Form 10-K filed May 8, 2014 with the SEC.

 

The consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at September 30, 2014, and the results of its operations and cash flows for the nine months ended September 30, 2014 and 2013. The results of operations for the period ended September 30, 2014 are not necessarily indicative of the results to be expected for future quarters or the full year.

 

On December 12, 2013, the Company completed a 200 for 1 common share consolidation; the share consolidation has been retroactively applied to all common share, weighted average common share, and loss per common share disclosures.

 

Recent Accounting Pronouncements

 

The Company has adopted all mandatory effective new accounting pronouncements with no material impact on its consolidated financial statements or disclosures.

 

The Company has evaluated all other recent accounting pronouncements and determined that they would not have a material impact on the Company’s consolidated financial statements or disclosures.

  

 

NOTE 3 – PROPERTY AND EQUIPMENT

 

		Cost $				Accumulated Depreciation $				September 30, 2014 Net Carrying Value $				December 31, 2013 Net Carrying Value $
Computer hardware			4,323				4,323				-				-
Equipment			21,182				21,182				-				-
Furniture and fixtures			23,653				6,060				17,593				20,892
Demonstration equipment			357,620				-				357,620				157,872
Computer software			392				392				-				-
Leasehold improvements			38,163				9,595				28,568				34,413
			445,333				41,552				403,781				213,177

 

As at September 30, 2014, demonstration equipment was under construction and was 40% complete.

 

During the nine month period ended September 30, 2014 and year ended December 31, 2013, the Company recorded no impairment write-downs on the property and equipment.

 

The Company has $41,848 held in escrow with a lender to finance a purchase order intended to be used for its demonstration asset (Note 10).

 

NOTE 4 – DUE TO RELATED PARTY

 

As at September 30, 2014 the Company owed $251,888 (December 31, 2013 - $249,703) for cash advances received from the President of the Company, which are non-interest bearing, unsecured, and due on demand.

 

 

NOTE 5 - CONVERTIBLE NOTES PAYABLE

 

The Company had the following notes payable outstanding as of September 30, 2014 and December 31, 2013:

 

		September 30, 2014				December 31, 2013
Note C-1 Dated – March 18, 2008			-				250,000
Note C-2 Dated – August 15, 2008			62,821				250,000
Note C-3 Dated – March 18, 2014			11,500				-
Note C-4 Dated – November 8, 2013 (Note $28,000 less Discount $16,554)			11,446				6,843
Note C-5
Dated – June 18, 2014 (Note $9,500 less Discount $7,125)			2,375				-
Note C-6
Dated – May 23, 2014 (Note $42,500 less Discount $38,452)			4,048				-
Note C-7
Dated – June 24, 2014 (Note $32,500 less Discount $16,286)			16,214				-
Note C-11
Dated – July 30, 2014 (Note $200,000 less Discount $9,796)			190,204				-
Note C-12
Dated – August 12, 2014 (Note $32,500 less Discount $9,070)			23,430				-
Note C-13
Dated – August 29, 2014 (Note $32,500 less Discount $15,646)			16,854				-
Note C-14
Dated – July 1, 2014			35,000				-
Note C-15
Dated – July 11, 2014 (Note $35,000 less Discount $35,000)			-				-
Note C-16
Dated – July 9, 2014 (Note $70,000 less Discount $67,293)			2,707				-
Note C-17
Dated – July 1, 2014 (Note $13,750 less Discount $0)			13,750				-
Note C-18
Dated – July 14, 2014 (Note $50,000 less Discount $50,000)			-				-
Note C-19
Dated – September 12, 2014 (Note $75,000 less Discount $26,437)			48,563				-
Note C-20
Dated – July 7, 2014			10,000				-
Total convertible notes payable		$	448,912			$	506,843
Less: current portion of convertible notes payable			437,466				500,000
Long-term convertible notes payable		$	11,446			$	6,843

  

 

Note C-1: On March 18, 2008, the Company entered into a convertible promissory note agreement for $250,000.  Pursuant to the agreement, the note bears interest at 8% per annum.  The principal balance and all accrued interest was due and payable on March 18, 2011 (the “Maturity Date”) provided that the note holder has given written notice to the Company on or after September 18, 2010, but prior to the Maturity Date, demanding full payment of this note as of the Maturity Date (the “Payoff Notice”).  The principal amount and accrued interest shall be converted into common stock of the Company upon the first to occur of the following events and the Company shall provide a written notice to the note holder of the occurrence of any such conversion event (“Conversion Notice”): (i) If the Company has not received a Payoff Notice and no event of default has occurred as of the Maturity Date; (ii) the final closing date of a minimum of $500,000 financing  (the “Next Financing Closing”) which results in the Company receiving new capital investment in exchange for the issuance by the Company of a capital interest in the Company; and (iii) immediately prior to the occurrence of any of the following (“Change of Control”): when (1) the Company sells, conveys, or otherwise disposes of all or substantially all of its property or business; or (2) when the Company causes to be registered and sold any of its shares of common stock pursuant to and under a registration statement prepared and filed in compliance with the Federal Securities Act of 1933; or (3) when the Company effects any transaction which results in one or more stockholders who were not stockholders of the Company immediately prior to such transaction owning more than sixty-five percent (65%) of the voting rights of the Company.

 

If conversion occurs at the Next Financing Closing, then the note is convertible into the same type, series, and class of securities issued under the Next Financing Closing.  The conversion price shall equal to conversion amount divided by the average price per share received by the Company at the Next Financing Closing, multiplied by 95% if the Next Financing Closing occurs on or before September 18, 2008, 90% if the Next Financing Closing occurs after September 18, 2008 but on or before September 18, 2009, 85% if the Next Financing Closing occurs after September 18, 2009 but on or before March 18, 2010, or 80% if the Next Financing Closing occurs after March 18, 2010.

 

If the conversion occurs at the Maturity Date or upon a Change of Control, then the conversion price shall be equal to $1,872 per share.

 

Pursuant to ASC 470-20, “Debt with Conversion and Other Options,” the Company did not allocate any proceeds to the conversion feature at issuance as the value of the conversion feature should not be recognized until the contingency event occurs.  The Company also evaluated the conversion feature under ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity,” and determined that the conversion feature did not meet the

criteria necessary for derivative treatment.
 

As of the Maturity Date, the Company has not received new capital investment of a minimum of $500,000 or a Payoff Notice from the note holder.  Pursuant to the terms of the agreement, the principal amount and accrued interest was then convertible into common stock of the Company.  The Company determined that there was no beneficial conversion feature as the fair value of common stock of the Company is below the conversion price of $1,872. At September 30, 2014, the promissory note has been repaid or converted.

 

Note C-2: On August 15, 2008, the Company entered into a secured convertible promissory note agreement for $250,000.  The convertible promissory note, which was due on September 1, 2010, bears interest at the rate of 9% per annum.  In the event the note is not repaid or converted on or prior to September 1, 2010 or after an event of default, the rate of interest applicable to the unpaid principal amount shall increase to 15% per annum.  Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s next issued series of preferred stock for not less than $1,500,000 at the per share price.  Interest will either be paid or converted at the option of the holder; or (ii) in the event that the conversion in (i) does not occur by August 30, 2010, then the holder will have the option of converting the note into the requisite number of units of the Company’s preferred stock.  The conversion price will be determined by the Company immediately prior to the time of conversion.

 

 The conversion price will be determined through (i) or (ii) below at the option of the Company:

 

i).  The per share value of each share of preferred stock will equal to the result of the following formula: (1) six times the average earnings before interest, taxes, depreciation and amortization (“EBITDA”) of the Company for the 2008 and 2009 fiscal years, divided by the product of (1) by the number of preferred stock issued and outstanding.

 

ii). The fair market value of each share of preferred stock as of August 30, 2010.  The fair market value of the preferred stock shall be determined by a qualified appraiser jointly selected by the Company and the note holder.

 

Pursuant to ASC 470-20, “Debt with Conversion and Other Options,” the Company did not allocate any proceeds to the conversion feature at issuance as the value of the conversion feature should not be recognized until the contingency event occurs.  The Company also evaluated the conversion feature under ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity,” and determined that the conversion feature did not meet the criteria necessary for derivative treatment.

 

As of August 30, 2010, the Company had not completed a financing of a minimum of $1,500,000 and the note holder did not contact the Company to determine the fair market value of the preferred stock or demand payment.  On January 1, 2014, the Company converted $50,000 of the principal balance for 1,700,000 shares of common stock of the Company. On June 2, 2014, the Company converted $14,962 of the principal balance for 2,992,440 shares of common stock of the Company. For the quarter September 30, 2014, the Company converted $122,218 of the principal balance for 367,046,966 shares of common stock of the Company.

 

 

On May 23, 2014, the Company entered into an Assignment and Assumption Agreement where as a third-party has assumed the obligation of this convertible note. The Agreement required that the third-party pay the principal and interest of the outstanding debt over 5 tranches. These payments are discounted as agreed by all parties and the total payment to be paid on the note is $200,000. The full principal balance has been converted or repaid. The remaining balance relates to interest accrued on the balance.

 

Note C-3: On March 18, 2014 the Company entered into a convertible promissory note agreement for $70,000. Pursuant to the agreement, the note bears no interest. The principle balance was due and payable on June 18, 2014. During the three months ended June 30, 2014, an additional $11,500 was loaned to the Company. The principal amount shall be converted into shares of common stock of the Company at a fixed conversion price of $0.0001 at the option of the Holder, in whole at any time and from time to time. The Holder shall effect conversions by delivering the company the form of Notice of Conversion. In the event the note is not repaid or converted on or prior to June 18, 2014 or after an event of default, the rate of interest applicable to the unpaid principal amount shall increase to 22% per annum. 

 

Pursuant to ASC 470-20, “Debt with Conversion and Other Options,” the Company did not allocate any proceeds to the conversion feature at issuance as the value of the conversion feature should not be recognized until the contingency event occurs.  The Company also evaluated the conversion feature under ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity,” and determined that the conversion feature did not meet the criteria necessary for derivative treatment. During the three month period ended September 30, 2014, $70,000 of the principal balance was repaid with a remaining balance of $11,500. The balance of the note has not been converted or been repaid.

 

Note C-4: On November 8, 2013, the Company entered into a convertible promissory note with a face value of $37,375 (the “Principal Amount”), which includes $30,000 advanced by the Holder, $2,500 in expenses incurred by the Holder and original issue discount of $4,875. The Principal Amount outstanding shall be due and payable on the date that is 18 months from the Issuance Date. In addition, pursuant to the convertible promissory note the Company issued 59,325 common stock purchase warrants. Each warrant is exercisable into one common share at a price of $126 per share for a period of five years. During the three month period ended September 30, 2014 the Company issued 36,291,360 common shares for the exercise of the 59,325 of cashless warrants.

 

At any time after the Issuance Date, this Note shall be convertible (in whole or in part), at the option of the Holder (the “Conversion Option”), into such number of fully paid and non-assessable shares of Common Stock (the “Conversion Rate”) as is determined by dividing that portion of the outstanding principal balance under this Note as of such date that the Holder elects to convert by the Conversion Price.  The term “Conversion Price” shall mean a 40% discount of the lowest reported sale price of the common stock for the 20 trading days immediately prior to (i) the date of the Purchase Agreement, or (ii) the Voluntary Conversion Date. On June 20, 2014, the Company converted $9,375 principal balance of this note for 1,250,000 common stock of the Company. The remaining balance of the note at September 30, 2014 is $28,000.

 

Note C-5: On June 18, 2014, the Company entered into a convertible promissory note with a face value of $9,500 (the “Principal Amount”). The Principal Amount outstanding shall be due and payable on the date that is 12 months from the Issuance Date. In addition, pursuant to the convertible promissory note the holder has the right to convert the Note at a price of $0.0001 per share. At September 30, 2014, the promissory note has not been repaid or converted.

 

Note C-6: On May 23, 2014, the Company entered into a convertible promissory note agreement for $42,500.  The convertible promissory note, which is due on February 28, 2015, bears interest at the rate of 8% per annum.  In the event the note is not repaid or converted on or prior to February 28, 2015 or after an event of default, the rate of interest applicable to the unpaid principal amount shall increase to 22% per annum.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 55% multiplied by the Market Price which represents a 45% discount. The Market Price means the average of the lowest three Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

 

At September 30, 2014, the promissory note has not been repaid or converted.

 

Note C-7: On June 24, 2014, the Company entered into a convertible promissory note agreement for $32,500.  The convertible promissory note, which is due on March 24, 2015, bears interest at the rate of 8% per annum.  In the event the note is not repaid or converted on or prior to February 28, 2015 or after an event of default, the rate of interest applicable to the unpaid principal amount shall increase to 22% per annum.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 55% multiplied by the Market Price which represents a 45% discount. The Market Price means the average of the lowest three Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted.

 

Note C-11: On July 30, 2014, the Company entered into a revolving line of credit for $200,000.  The revolving line of credit, which renews annually, bears interest at the rate of 12% per annum. Of the $200,000 principal, $39,252 was received in cash, $70,000 was received to pay down Note C-3, $41,848 was held in escrow with the note holder, and $48,900 was required in legal fees. The maximum draw amount for the revolving line of credit is $5,000,000.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 85% multiplied by the Market Price. The Market Price means the average of the lowest Five Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted.

 

Note C-12: On August 12, 2014, the Company entered into a convertible promissory note agreement for $32,500.  The convertible promissory note, which is due on October 12, 2014, bears interest at the rate of 8% per annum.  In the event the note is not repaid or converted on or prior to October 12, 2014 or after an event of default, the rate of interest applicable to the unpaid principal amount shall increase to 22% per annum.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 55% multiplied by the Market Price which represents a 45% discount. The Market Price means the average of the lowest three Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted

 

Note C-13: On August 29, 2014, the Company entered into a convertible promissory note agreement for $32,500.  The convertible promissory note, which was due on October 29, 2014, bears interest at the rate of 8% per annum.  In the event the note is not repaid or converted on or prior to October 12, 2014 or after an event of default, the rate of interest applicable to the unpaid principal amount shall increase to 22% per annum.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 55% multiplied by the Market Price which represents a 45% discount. The Market Price means the average of the lowest three Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted

 

Note C-14: On July 1, 2014, the Company entered into a convertible promissory note agreement for $35,000.  The convertible promissory note, which is due on July 1, 2015, bears interest at the rate of 8% per annum.  

 

 

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 52% multiplied by the Market Price. The Market Price means the average of the lowest fifteen Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted

 

Note C-15: On July 11, 2014, the Company entered into a convertible promissory note agreement for $35,000.  The convertible promissory note, which is due on July 11, 2015, bears interest at the rate of 8% per annum.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 52% multiplied by the Market Price. The Market Price means the average of the lowest fifteen Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted

 

Note C-16: On July 9, 2014, the Company entered into a convertible promissory note agreement for $70,000.  The convertible promissory note, which is due on July 9, 2015, bears interest at the rate of 8% per annum.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 52% multiplied by the Market Price. The Market Price means the average of the lowest fifteen Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted

 

Note C-17: On July 1, 2014, the Company entered into a convertible promissory note agreement for $13,750.  The convertible promissory note, which is due on July 1, 2015, bears interest at the rate of 10% per annum.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 52% multiplied by the Market Price. The Market Price means the average of the lowest fifteen Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted

 

Note C-18: On July 14, 2014, the Company entered into a convertible promissory note agreement for $50,000.  The convertible promissory note, which is due on July 14, 2015, bears interest at the rate of 8% per annum.  

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 52% multiplied by the Market Price. The Market Price means the average of the lowest fifteen Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

At September 30, 2014, the promissory note has not been repaid or converted

 

Note C-19: On September 12, 2014, the Company entered into a convertible promissory note agreement for $75,000.  The convertible promissory note, which is due on September 12, 2015, bears interest at the rate of 6% per annum.  In the event the note is not repaid or converted on or prior to September 12, 2014 or after an event of default, the rate of interest applicable to the unpaid principal amount shall increase to 16% per annum.  

 

 

Pursuant to the agreement, the holder of the note has the right to convert upon written notice to the Company the principal then due under the note on the following terms: (i) automatically into the Company’s common stock at a conversion price of 65% multiplied by the Market Price which represents a 35% discount. The Market Price means the average of the lowest ten days Trading Prices for the Common stock during the (30) Trading Day period ending on the last complete Trading Day prior to Conversion Date.

 

This note is secured by 10,000,000 of common stock of the Company.

 

At September 30, 2014, the promissory note has not been repaid or converted

 

Note C-20: On July 7, 2014, the Company entered into a convertible promissory note agreement for $10,000. The note is non-interest bearing.  The convertible promissory note is due on December 31, 2014.  

 

On October 3, 2014 this note was converted into 1,515,000 of common stock of the Company (Note 11).

 

Other Notes Paid or Converted

 

Note C-8: On March 11, 2014, the Company entered into a convertible promissory note agreement for $15,000.  The convertible promissory note, which was due on April 1, 2014, bore interest at the rate of 0% per annum.  On April 3, 2014 this note was converted into 150,000 common shares and has been fully satisfied.

 

Note C-9: On March 26, 2014, the Company entered into a convertible promissory note agreement for $5,000.  The convertible promissory note, which was due on June 26, 2014, bore interest at the rate of 0% per annum.   Pursuant to the agreement, the holder of the note had the right to convert upon written notice to the Company the principal then due under the note, the holder had the option of converting the note into the requisite number of units of the Company’s common stock.  The conversion price was determined by the Company immediately prior to the time of conversion.

 

Pursuant to ASC 470-20, “Debt with Conversion and Other Options,” the Company did not allocate any proceeds to the conversion feature at issuance as the value of the conversion feature should not be recognized until the contingency event occurs.  The Company also evaluated the conversion feature under ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity,” and determined that the conversion feature did not meet the criteria necessary for derivative treatment. On April 29, 2014 this note was converted into 10,000 common shares and has been fully satisfied.

 

Note C-10: On March 26, 2014, the Company entered into a convertible promissory note agreement for $2,000.  The convertible promissory note, which was due on June 26, 2014, bore interest at the rate of 0% per annum.   Pursuant to the agreement, the holder of the note had the right to convert upon written notice to the Company the principal then due under the note, the holder had the option of converting the note into the requisite number of units of the Company’s common stock.  The conversion price was determined by the Company immediately prior to the time of conversion.

 

Pursuant to ASC 470-20, “Debt with Conversion and Other Options,” the Company did not allocate any proceeds to the conversion feature at issuance as the value of the conversion feature should not be recognized until the contingency event occurs.  The Company also evaluated the conversion feature under ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity,” and determined that the conversion feature did not meet the criteria necessary for derivative treatment. On April 29, 2014 this note was converted into 16,667 common shares and has been fully satisfied.

 

During the nine months ended September 30, 2014, the Company recognized an aggregate of $35,761 (September 30, 2013-$45,715) in interest expense for the convertible notes.

 

NOTE 6 – ADVANCES RECEIVED

 

During the year ended December 31, 2013, the Company received $674,500 in advances from Global Energy Innovations Inc., an independent company incorporated in British Columbia, Canada with no contractual affiliation with Global Energy Innovations, Inc., or with GEI Global Energy Corp.  The final terms of the repayment agreement are currently under negotiation.

 

 

NOTE 7 - EQUITY

 

On September 30, 2014, the Company had 981,345,686 issued and outstanding and the Company had 8,000,000,000 shares of common stock authorized.

 

Each share of common stock shall have one (1) vote per share for all purpose. The common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. The Company’s common stock holders are not entitled to cumulative voting for election of Board of Directors.

 

Nine months ended September 30, 2014

 

Stock Issued for Cash

 

During the nine months ended September 30, 2014, the Company issued 2,283,333 shares of common stock for proceeds of $43,000.

 

Stock Issued for Services

 

During the nine months ended September 30, 2014, the Company issued 116,523,601 shares of common stock valued at $5,937,384 as follows:

 

Date		Number of Shares
Period ended March 31, 2014			41,723,601
Period ended June 30, 2014			3,450,000
Period ended September 30, 2014			71,350,000
Total			116,523,601

 

Stock Issued in Connection with the Conversion of Debt

 

During the three months ended March 31, 2014, the Company issued 1,930,000 shares of common stock valued at $87,572 for the conversion of the principal and accrued interest of debt held by 2 convertible debt holders. During the three months ended June 30, 2014 the Company issued 4,429,107 shares of common stock valued at $46,337. During the three months ended September 30, 2014 the Company issued 567,572,283 shares of common stock valued at $504,997. The fair value of the shares issued for the conversion of debt was recorded as a reduction in convertible notes payable and accrued interest payable for the nine months ended September 30, 2014.

 

Date		Number of Shares				Fair Value
March 31, 2014			1,930,000			$	87,572
June 30, 2014			4,429,107				46,337
September 30, 2014			567,572,283				504,997
Total			573,931,390			$	638,906

 

 

Stock Issued in Connection with the Conversion of Accounts Payable

 

During the nine months ended September 30, 2014, the Company issued 233,379,633 shares of common stock valued at $158,742.

 

Stock Issued in Connection with the cashless warrants

 

During the nine months ended September 30, 2014, the Company issued 36,291,360 shares of common stock upon the exercise of cashless warrants. As at September 30, 2014, no more exercisable warrants remain outstanding.

 

Stock Issued for Deferred Financing Cost

 

During the six month period ended June 30, 2014, the Company issued 1,500,000 shares of common stock valued at $11,500 for deferred financing costs. The Company determined that this financing was not going to be completed and expensed it during the three months ended June 30, 2014.

 

During the nine month period ended September 30, 2014, the Company issued 15,625,000 of common stock valued at $125,000 for deferred financing costs. These costs will be amortized using the effective interest rate method.

 

Stock Issued and Issuable under Anti-Dilution Provisions

 

During the nine month period ended September 30, 2014, the Company issued 1,684,399 shares under anti-dilution provisions. As at September 30, 2014, the Company had 2,129,523,186 shares of common stock issuable under anti-dilution provisions.

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value per share. The preferred stock may be divided into number of series as the Board of Directors may determine. The Board of Directors is authorized to determine and alter the rights, preferences, privileges and restrictions granted to and imposed upon any wholly issued series of preferred stock, and to fix the number of shares of any series of preferred stock and the designation of any such series of preferred stock. Currently there are 2,500 shares of Series A Convertible Super-Voting Preferred Stock issued and outstanding.

 

Series A Convertible Super-Voting Preferred Stock

 

The Board of Directors has designated a series of preferred stock entitled Series A Convertible Super-Voting Preferred Stock. Each of these preferred shares has a common stock conversion rate of 1/1000 of the total issued shares of the common stock of the Company at the time of conversion.  Furthermore, these preferred shares will at all times prior to their total conversion have a collective voting right equal to 50.00% of the total outstanding voting power of the corporation.  As a result of the issuance to the Chief Executive Officer of 2,500 shares of Series A Convertible Super-Voting Preferred Stock and his holdings of the Company’s common stock, the Chief Executive Officer has voting control of the Company, with the voting power to elect the Company’s Board of Directors.

 

 

Share Purchase Warrants

 

						Weighted Average
						Exercise
		Number of				Price
		Warrants				$
Balance, December 31, 2013			297				126
Cashless warrants exercised (1)			(297	)			-
Balance, September 30, 2014			-				-

 

(1)

The Company issued 297 (59,325 pre-split) warrants during the year ended December 31, 2013. The exercise price per share of common stock under this warrant was $126 per share ($0.63 pre-split) subject to anti-dilution provisions.

 

If at any time after the earlier of (i) the six month anniversary of the date of the agreement and (ii) the completion of the then-applicable holding period required by Rule 144, or any successor provision then in effect, then these warrants may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder is entitled to receive a number of warrant shares equal to the quotient obtained by dividing [(A-B)(X)] by (A), where:

 

(A)

= the volume weighted average price on the trading day immediately preceding the date on which the holder elects to exercise this warrant by means of a “cashless exercise.”

(B)

= the exercise price of this warrant, adjusted for dilution provisions.

(X)

= the number of warrant shares that would be issuable upon exercise of warrant in accordance with the terms of this warrant if such exercise were by means of a cash exercise rather then a cashless exercise.

 

During the nine months ended September 30, 2014, the Company issued 36,291,360 shares of common stock upon the exercise of cashless warrants. As at September 30, 2014, no more warrants remain outstanding.

 

NOTE 8 – SELLING, GENERAL AND ADMINISTRATIVE

 

		Nine Months Ended
		September 30, 2014				September 30, 2013
Business development		$	551,871			$	136,251
Professional services			1,157,360				27,622
Rent			41,359				30,225
Office expense			90,098				34,590
Management salaries			1,279,648				76,629
Total general and administrative		$	3,120,336			$	308,317

 

NOTE 9 – COMMITMENTS

 

The Company entered into an agreement with Atlanta Marketing Consultant (“Atlanta”), which commenced on May 15, 2010 where Atlanta will be entitled to a 5% commission of the total amount received by the Company on all business generated as a result of each business arrangement introduced by the efforts of Atlanta.  In the event Atlanta is able to assist the Company in the raising of capital through said contacts, Atlanta will be entitled to a one-time consulting fee of 3% to 5% of the amount of capital raised. If the amount of capital raised by the Company is $750,000 or below, Atlanta will receive a 5% consulting fee.  If the amount of capital raised is over $750,000 but below $1,500,000, Atlanta will receive in a consulting fee of 4% of monies raised. Any amount of capital raised by the Company exceeding $1,500,000 will result in a consulting fee payment of 3%. All payments will be due on a quarterly basis and paid on the 5th day of the month of each new quarter of the calendar year. The agreement shall not terminate as long as the Company is receiving income or equity positions from parties brought to the Company as a result of Atlanta’s efforts for a period ending 5 years from the first transaction.

 

 

The Company entered into a service agreement with Troy Spencer (“Spencer”) dated on November 19, 2012 in which Spencer has been engaged to assist the Company in raising capital through said contracts. Spencer will be entitled to a consulting fee of 3% to 10% of the amount of capital raised.  If the amount of capital raised by the Company is $750,000 or below, Spencer will receive a 10% consulting fee.  If the amount of capital raised is over $750,000 but below $1,500,000, Spencer will receive a consulting fee of 4% of monies raised.  Any amount of capital raised by the Company exceeding $1,500,000 will result in a consulting fee payment of 3%.  All aforementioned payments will be due within 10 business days after the Company receives funding from an investor.  Spencer will receive fee payments for investments from the same investors for a period of 36 months from the initial investment.  The agreement shall not terminate as long as the Company is receiving income or equity positions from all aforementioned parties and other potential parties brought to the Company as a result of Spencer’s efforts.

 

On March 2, 2013 the Company entered into a consulting agreement with Earl H. Roberts Limited (“Roberts”).  The Company agreed to pay a fee of 10% of the total cash or value of stock issued of business derived from Roberts’ efforts from introductions, for licensing of technologies, or sale of technology.  Furthermore, the Company agrees to pay a fee equal to 2% of the equity ownership for technology commercialization partnerships as a result of introductions.  Roberts can elect to forgo cash payment for stock in the Company.

 

On May 30, 2013, the Company entered into a lease agreement for Engineering and Office Rental Space with Trialon Corporation. The monthly lease rate is $5,075.    The Company paid a security deposit of $5,075 and the first six months of rent of $30,450 in June 2013.    There is no prepaid rent balanced as of September 30, 2014.

 

NOTE 10– RESTRICTED CASH

 

During the three month period ended September 30, 2014, the Company entered into an agreement with a lender to provide financing for a purchase order for its demonstration asset (See Note 5 – Note C-11). As at September 30, 2014, $41,848 is held in escrow until the purchase order is finalized and complete.

 

NOTE 11– SUBSEQUENT EVENTS

 

On October 3, 2014, the Company recorded the issuance of common stock of 1,515,000 for the conversion of $10,000 debt.

 

On October 10, 2014, the Company recorded the issuance of common stock of 56,300,000 for the conversion of $5,630 debt.

 

On October 3, 2014, the Company recorded the issuance of common stock of 69,531,249 for the conversion of $37,350 debt.

 

On October 5, 2014, the Company recorded the issuance of common stock of 5,000,000 for purchase of demonstration supplies.

 

On October 10, 2014, the Company recorded the issuance of common stock of 113,806,019 for the conversion of $25,276 debt.

 

 

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

 

Forward-Looking Statements

 

Management’s Discussion and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, delayed payments of accounts receivables, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets (i.e. SBDC). The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.

 

Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.

 

In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

 

Our Company

 

On August 15, 2013 we completed an acquisition of 100% of the outstanding shares of capital stock of GEI.  As part of the closing of this transaction, control of the Company was transferred to Dr. Berry.

 

GEI, founded in 2007, is part of the fuel cell and sustainable/alternative energy industry. Fuel cells are an efficient, combustion-less, reliable, and virtually pollution-free energy source that provide electricity to power a wide array of applications, including buildings (manufacturing facilities, hotels and hospitals), primary power for grid integration, automobiles, emergency back-up systems, and base load grid power. A fuel cell uses fuel - usually hydrogen, extracted from common fuels such as natural gas, and oxygen - to produce electricity. In principle, a fuel cell is an electrochemical device that operates like a battery. However, unlike a battery, a fuel cell requires re-fueling and not recharging. Fuel cells will continue to produce electricity and heat as long as there is a constant fuel source. Hydrogen fuel cells work simply, have no moving parts, and operate silently, with water and excess heat as their only by-products. Fuel cells thus provide the ideal solution for a myriad of portable, on-board and stationary electric power generation applications.

 

The GEI fuel cell systems can operate on a number of fuel sources such as natural gas, ethanol, propane and biofuels. This would permit GEI to take advantage of the existing logistic fuel infrastructure, as fuel sources such as natural gas are cost-competitive and abundant in the United States and certain other regions. Since the GEI X5 "brand" fuel cell system is intended to be scalable and stackable, it enables the Company to become a market leader in every category of the fuel cell Industry and has the potential to create new categories. GEI can build fuel cells ranging from 2 kW - 100 kW and since the Company has the ability of stacking the fuel cells like building blocks it can build fuel cell power plants that are multi-megawatt in size.

 

 

The GEI fuel cell system provides primary power for homes and buildings and is viewed by management to have a competitive advantage due to very restrictive offerings from other companies with only back-up power (due to fuel restrictions) or power to one singular application (due to technology restrictions). The GEI X5 core strategy is to avoid providing a "niche" technology for a "niche" application, but rather provide a robust and scalable systems technology applicable across multiple platforms that allow high volume cost reductions and savings in design and manufacturing cost. There are currently 3 patents that protect this technology and the Company plans for several more to be filed before the end of 2014.

 

 DESCRIPTION OF BUSINESS

 

 We design develop and manufacture fuel cell systems.  We operate in the “clean energy” sector of the power industry.

 

Our principal product, the X5 Smart Adaptable Fuel Cell Auxiliary Power Unit (the “GEI X5”) is a “hybrid” fuel cell auxiliary power unit (APU) at the core of systems that can be sized to meet the power requirements for many different applications. The technology allows the cells to run on a variety of fuel types, most notably natural gas.  We believe that our fuel cell products can be easily paired with other types of power generating units such as solar and wind.  Our products are intended to be both adaptable and reliable. The power stacks provide a range of power outputs from 5 kW to 100 kW, which can be combined further to achieve even greater power outputs.

 

We have identified opportunities in a number of different applications. These include large scale power generators, commercial trucking and recreational or military vehicles, and backup stationary power for residential or commercial outlets. We will seek to generate income through power generation in partnership or by licensing to large operators, through the sale of our units of various sizes, and through licensing agreements and joint ventures with other manufacturers.

 

We anticipate that we will achieve full commercial operations in 2015.

Corporate Information

 

We were incorporated on April 28, 2010 as a Nevada corporation. Pursuant to a Share Purchase Agreement dated August 15, 2013 we acquired all of the capital stock of Global Energy Innovations, Inc. (“GEI”), a Michigan corporation that was incorporated in 2007.  As a result of our acquisition of GEI, GEI’s founder, Dr. K. Joel Berry (“Dr. Berry”), acquired control and became our Chairman, Chief Executive Officer and Director.  Our executive offices are located at 6060 Covered Wagons Trail, Flint, MI 48532 USA; our telephone number is (810) 743-8491. Our website is located at http://www.geiglobal.com. The information on our website is not part of this Report. We are an emerging growth company, as that term is defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

 

GEI’s Products

 

Hybrid technology

GEI’s X5 Smart Adaptable Fuel Cell Auxiliary Power Unit (the “GEI X5”) is a “hybrid” fuel cell auxiliary power unit (APU) that incorporates a high temperature polymer electrolyte membrane (PEM) fuel cell and a high-energy density Lithium Polymer (LIPO) battery. Although fuel cell systems typically have a higher energy density compared with traditional batteries, fuel cell systems alone do not have the peak power and load following capabilities of a battery. The GEI X5 hybrid system thus benefits from the strengths of both technologies.

 

GEI’s X5 hybrid fuel cell power systems can be sized to meet the power requirements for any application. The battery or energy storage system responds to instant power demands, provides for instant start capability, and most importantly, provides for smooth operations. The fuel cell charges the battery during periods of low power demands. Since fuel processors are unable to respond instantly to changing load demands, systems without an energy storage media result in exceptionally difficult control strategies. Conversely, the GEI X5 hybrid system provides for simple, reliable, fuel efficient and cost effective control systems.

 

Fuel supply, by-products and efficiencies

The GEI X5 is designed primarily to run on natural gas. The ideal location for a large scale operation of, for example, 100MW is thus a natural gas field where the gas can be converted to electricity and fed into the grid immediately. Smaller operations, such as 25kW installations for apartments, restaurants and other businesses feed off the natural gas installed network. The GEI X5 can, however, be powered by any fuel from which hydrogen can be readily extracted.

 

Major by-products are oxygen and water. Heat generated in the cooling process is used in the process of extracting hydrogen from the natural gas, resulting in an overall fuel to electricity efficiency of between 40% and 50%. Harmful by-products are minimized due to the recapturing of the fuel cell stack exhaust.

 

Integration with other generators 

The GEI X5 can be produced as large stationary systems or smaller portable systems. As such it can be plugged in as an auxiliary unit alongside other power sources such as solar, wind, tidal generators. The portable systems are suitable for less permanent locations such as mining camps or military installations where solar units are frequently the major power source.

 

GEI’s proprietary technologies

GEI, through an exclusive license on one patent held by Dr. Berry and two patents pending, has proprietary rights over its Configurable Input High-Power DC-DC Converter (US: 7,843,185) (power management), its fuel cell bipolar plate for optimal uniform delivery of reactant gases and efficient water removal (patent pending) (thermal systems management), and its stack design and assembly of high temperature PEM fuel cells (patent pending).

  

GEI’s Markets

 

Industry background and trends

The industry in which GEI operates – power generation – is not new. With increasing development however, especially in the highly populated developing countries of Asia, power generators throughout the world are being required to provide more efficient, cleaner, more affordable and flexible power in ever increasing quantities from power sources that are scarce and possibly finite. We believe that economic, regulatory and political pressure will continue to be applied to power generators, whether their source is fossil fuels, hydro, solar, wind, bio-fuels or any other source.

 

The most likely areas of significant growth in the foreseeable future are in Asia. The growing middle class in Asia requires greater access to electrical power but is hampered by the lack of infrastructure, particularly well-developed electrical grids. GEI’s fuel-flexible and scalable fuel cell systems offer very appropriate stand-alone systems that can be paired with other stand-alone but less dependable systems such as solar and wind.

 

Patents, Trademarks and Copyrights 

We hold an exclusive license to one United States patent owned by Dr. Berry, and we hold directly right to two pending patent applications.  These patent rights concern our Configurable Input High-Power DC-DC Converter (US: 7,843,185) (power management), our fuel cell bipolar plate for optimal uniform delivery of reactant gases and efficient water removal (patent pending) (thermal systems management), and our stack design and assembly of high temperature PEM fuel cells (patent pending).  While there is no assurance that the pending patents will be issued or that additional patents will be granted, we intend to continue to apply for patent protection covering key portions of the technology used in our fuel cell products.

 

We presently own the U.S. trademarks to the name GEI Global Energy Innovations.

 

 

Results of Operations for the three and nine months ended September 30, 2014 and September 30, 2013

 

Three months ended

 

The Company generated $20,924 in other income for the three months ended September 30, 2014 compared to $nil for the three months ended September 30, 2013.

 

Selling, general and administrative expenses increased to $607,430 from $154,675 for the three months ended September 30, 2014 and September 30, 2013, respectively. The increase in our selling, general and administrative expenses are related largely to an increase in professional fees during the three months ended September 30, 2014 compared to in the three months ended September 30, 2013.

 

Consulting expense increased to $236,747 from $nil for the three months ended September 30, 2014 and September 30, 2013, respectively. Our consulting expense increased as a result of the increase in consulting services needed to develop our demonstration asset.

 

Interest expense increased to $50,210 from $15,393 for the three months ended September 30, 2014 and September 30, 2013, respectively. Our interest expense increased as a result of the increase in outstanding borrowings on our lines of credits from the conversion of our principle debt and accrued interest.

 

Depreciation expense decreased to $3,048 from $4,150 for the three months ended September 30, 2014 and September 30, 2013, respectively. Our depreciation expense decreased as a result of the decrease in amortizable assets for the period.

 

Deferred financing expense increased to $79,181 from $nil for the three months ended September 30, 2014 and September 30, 2013, respectively. Our deferred financing expense increased as a result of the outcome of our financing endeavors.

 

Nine months ended

 

The Company generated $20,924 in other income for the nine months ended September 30, 2014 compared to $nil for the nine months ended September 30, 2013.

 

Selling, general and administrative expenses increased to $3,120,336 from $308,317 for the nine months ended September 30, 2014 and September 30, 2013, respectively. The increase in our selling, general and administrative expenses are largely related to the increase in salaries of management, business development, and professional fees during the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013.

 

Consulting expense increased to $1,891,328 from $nil for the nine months ended September 30, 2014 and September 30, 2013, respectively. Our consulting expense increased as a result of the increase in consulting services needed to develop our demonstration asset.

 

Interest expense increased to $149,656 from $49,439 for the nine months ended September 30, 2014 and September 30, 2013, respectively. Our interest expense increased as a result of the increase in outstanding borrowings and accrued interest.

 

Depreciation expense increased to $9,144 from $6,721 for the nine months ended September 30, 2014 and September 30, 2013, respectively. Our depreciation expense increased as a result of the increase in our leasehold improvements.

 

Liquidity and Capital Resources

 

We expect to incur substantial expenses and generate significant operating losses as we continue to grow our operations, as well as incur expenses related to operating as a public company and compliance with regulatory requirements.

 

 

We have an accumulated deficit at September 30, 2014 of $12,323,832 and need additional cash flows to maintain our operations. We depend on the continued contributions of our executive officers and convertible note agreements to finance our operations and need to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of our products and business. We expect our cash needs for the next 12 months to be $850,000 to fund our operations. The ability of the Company to continue its operations is dependent on the successful execution of management’s plans, which include expectations of raising debt or equity based capital until such time that funds from operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with related parties to sustain the Company’s existence. There is no assurance that such funding, if required will be available to us or, if available, will be available upon terms favorable to us.

 

Cash flows from operations. Our cash (used in) operating activities were ($465,730) and ($351,835) for the nine months ended September 30, 2014 and September 30, 2013, respectively. The increase in cash used in operations was primarily attributable to the increase of general and administrative expenses in 2014 as compared to the 2013 period.

 

Cash flows from investing activities. Our cash (used in) investing activities were ($199,751) and ($166,697) for the nine months ended September 30, 2014 and September 30, 2013, respectively. The increase in cash used in investing activities was the purchase of equipment for our demonstration asset and leasehold improvements in our warehouse.

 

Cash flows from financing activities. Cash provided by financing activities was $690,986 and $533,626 for the nine months ended September 30, 2014 and September 30, 2013, respectively. We received cash from convertible debt issued, cash issued for common stock, and advances from our CEO for the nine months ended September 30, 2014. During the nine months ended September 30, 2014, we repaid part of our convertible notes payable and related party notes.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support or other benefits.

 

WHERE YOU CAN FIND MORE INFORMATION

 

You are advised to read this Quarterly Report on Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q, Annual Report on Form 10-K, and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.

 

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

  

 

ITEM 4.        CONTROLS AND PROCEDURES.

 

(a)	Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and Principal Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective since the Company has been ineffective in filing timely.

 

Our Chief Executive Officer and Principal Financial Officer are responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has used the framework set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, our Chief Executive Officer and Principal Financial Officer have concluded that our internal control over financial reporting were not effective as of September 30, 2014. There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. The Company has been ineffective in the timely filing of the company’s quarterly filings.

 

The Company’s material weaknesses in financial reporting were:

 

a.	There is no segregation of duties as our CEO is also our CFO.
b.	It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

 

There were no changes in our internal control over financial reporting that occurred during the nine months ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None

 

ITEM 1A.     RISK FACTORS

 

There were no material changes from the risk factors previously disclosed in Part II, Item 1A, “Risk Factors” in our  Annual Report on Form 10-K for the year ended October 31, 2012 during our nine months ended September 30, 2014.

 

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES

 

Stock Issued for Cash

 

During the nine months ended September 30, 2014, the Company issued 2,283,333 shares of common stock for proceeds of $43,000.

 

Stock Issued for Services

 

During the nine months ended September 30, 2014, the Company issued 116,523,601 shares of common stock valued at $5,937,384 as follows:

 

Date		Number of Shares
Period ended March 31, 2014			41,723,601
Period ended June 30, 2014			3,450,000
Period ended September 30, 2014			71,350,000
Total			116,523,601

  

Stock Issued in Connection with the Conversion of Debt

 

During the three months ended March 31, 2014, the Company issued 1,930,000 shares of common stock valued at $87,572 for the conversion of the principal and accrued interest of debt held by 2 convertible debt holders. During the three months ended June 30, 2014 the Company issued 4,429,107 shares of common stock valued at $46,337. During the three months ended September 30, 2014 the Company issued 567,572,283 shares of common stock valued at $504,997. The fair value of the shares issued for the conversion of debt was recorded as a reduction in convertible notes payable and accrued interest payable for the nine months ended September 30, 2014.

 

Date		Number of Shares				Fair Value
March 31, 2014			1,930,000			$	87,572
June 30, 2014			4,429,107				46,337
September 30, 2014			567,572,283				504,997
Total			573,931,390			$	638,906

  

Stock Issued in Connection with the Conversion of Accounts Payable

 

During the nine months ended September 30, 2014, the Company issued 233,379,633 shares of common stock valued at $158,742.

 

Stock Issued in Connection with the cashless warrants

 

During the nine months ended September 30, 2014, the Company issued 36,291,360 shares of common stock upon the exercise of cashless warrants. As at September 30, 2014, no more exercisable warrants remain outstanding.

 

Stock Issued for Deferred Financing Cost

 

During the six month period ended June 30, 2014, the Company issued 1,500,000 shares of common stock valued at $11,500 for deferred financing costs. The Company determined that this financing was not going to be completed and expensed it during the three months ended June 30, 2014.

 

During the nine month period ended September 30, 2014, the Company issued 15,625,000 of common stock valued at $125,000 for deferred financing costs. These costs will be amortized using the effective interest rate method.

 

 

Stock Issued and Issuable under Anti-Dilution Provisions

 

During the nine month period ended September 30, 2014, the Company issued 1,684,399 shares under anti-dilution provisions. As at September 30, 2014, the Company had 2,129,523,186 shares of common stock issuable under anti-dilution provisions.

 

Period from October 1, 2014 through November 17, 2014

 

On October 3, 2014, the Company recorded the issuance of common stock of 1,515,000 for the conversion of $10,000 debt.

 

On October 10, 2014, the Company recorded the issuance of common stock of 56,300,000 for the conversion of $5,630 debt.

 

On October 3, 2014, the Company recorded the issuance of common stock of 69,531,249 for the conversion of $37,350 debt.

 

On October 5, 2014, the Company recorded the issuance of common stock of 5,000,000 for purchase of demonstration supplies.

 

On October 10, 2014, the Company recorded the issuance of common stock of 113,806,019 for the conversion of $25,276 debt.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

  

There were no defaults upon senior securities during the nine months period ended September 30, 2014.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

N/A.

 

ITEM 5. OTHER INFORMATION

 

There is no information with respect to which information is not otherwise called for by this form.

 

ITEM 6. EXHIBITS.

 

The following documents are included herein:

 

3.1	Articles of Incorporation(1)
3.2	Bylaws(1)
10.1	Share Purchase Agreement, dated as of August 6, 2013 among K. Joel Berry, Suja Minerals, Corp. and Global Energy Innovations, Inc. (2)
14	Code of Ethics(3)
31	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act(1)
32	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act(1)

(1)	Incorporated herein
(2)	Incorporated by reference to the Registrant’s Form 8-K filed on August 21, 2013.
(3)	Incorporated by reference to the Form 10-Q filed on May 20, 2014

  

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

 

Registrant	GEI Global Energy Corporation
Date: November 17, 2014	By:	/s/ Dr. K. J. Berry
	Dr. K. J. Berry
	Chairman, Chief Executive Officer (Principal Executive Officer), President
Date: November 17, 2014	By:	/s/ Dr. K. J. Berry
	Dr. K. J. Berry
	Chief Financial Officer (Principal Accounting Officer),

 

 

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