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. 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.
Liquidity and Capital Resources
As of July 31, 2011, we had cash on hand of $5,118 and our liabilities totaled $4,292,604. For the year ended July 31, 2011, we reported net earnings from continuing operations of $118,921. On July 31, 2011, we had a working capital surplus of $347,406 and stockholders' equity of $56,562.
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 52,088,406 shares of common stock issued and outstanding as of October 28, 2011. Our common stock is traded on the OTC Bulletin Board.
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.
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 Sky Power Solutions Corp. (“Sky Power”) 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 Sky Power in the future.
License Agreements
We entered into a License Agreement (“Sky Power License Agreement”) with Sky Power in April 2008, providing for our license to Sky Power of our patent applications and technologies for rechargeable lithium ion batteries for electric vehicles and other applications (“Licensed Products”). Under the Sky Power License Agreement, we have the right to purchase our requirements of lithium ion batteries from Sky Power, and our requirements of lithium ion batteries shall be supplied by Sky Power in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for other customers of Sky Power. Our cost for lithium ion batteries purchased from Sky Power shall be Sky Power’s actual manufacturing costs for such batteries for the fiscal quarter of Sky Power in which our purchase takes place. On May 25, 2010, the Sky Power License Agreement was amended to reflect Sky Power’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.
Sky Power agreed to invest a minimum of $1,500,000 in 2008 and 2009, in development of the technology for the Licensed Products. To date, Sky Power 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 Sky Power 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.
On May 25, 2010, the Sky Power License Agreement was amended to limiting the license granted to Sky Power to only the United States, permitting Li-ion to grant other licenses to companies in other parts of the world.
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.
The license agreement provides for an annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party. LEVC is required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year. The Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2011, which is now delinquent. The Company has not reflected the amount due from LEVC but has recorded the amount received as deferred revenue and amortized the license fee income ratably over the period. If LEVC does not pay the balance of the fee, the Company will record the receivable and establish a reserve for doubtful accounts. The Company will continue to recognize license fee income ratably over the life of the agreement.
The Company is currently in discussions with LEVC regarding the delinquency. LEVC is attempting to complete a public registration in Germany. As part of the registration statement, LEVC is required to be current with the Company in connection with the annual license fees. LEVC expects to make the delinquent payments to the Company prior to December 31, 2011.
The note of $1,750,000 has been reflected on the books of the Company and the fee is being amortized over the life of the ten-year agreement.
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 speeds up to 80 miles per hour with acceleration from zero to sixty in twelve seconds. Both these innovative vehicles manufactured by us 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.
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.
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.
Until recently, the market of all electric street-legal vehicles was small due to the technological complexities of producing competitively priced comparable cars. Historic production numbers in the 1990’s for Honda’s EV Plus were 340 units and Nissan’s Hypermini was 219 units. Toyota produced 1,500 RAV4 EVs and GM was able to lease 834 EV1’s. Advances in electric vehicle technology are allowing the industry to expand. Recent data indicates that Tesla sold over 700 electric vehicles through August 2009. The Norwegian company, THINK, created 1,160 machines and several of them are sold. According to a survey by Wintergreen Research Inc, 685 electric vehicles have been officially sold in the USA that are fully legal electric vehicles.
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.
Fisker Automotive has received EPA certification for its Karma sedan, a hybrid electric and turbocharged gasoline engine, and has commenced sales of the vehicle.
General Motors’ Chevrolet division is developing its model named “Volt”, an electric car, with a scheduled launch in the 2011 model year. Scheduled for Spring 2012 Volt - electric vehicle has two sources of energy, an electric source-a battery-that allows you to drive gas-free for an EPA-estimated 35 miles, and also an onboard gas generator that produces electricity so you can go up to a total of 375 additional miles on a full tank of gas4. You can drive using only electricity or you can use electricity and gas.
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 commenced sales in December 2010.
Employees
As of the date of this report, we have 23 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 $1,318,267 in our fiscal year ended July 31, 2011, and $1,264,420 in our fiscal year ended July 31, 2010.
Patents and Trademarks
We 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.
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.
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 did not have revenues from our joint ventures or sales of our products. We have not signed any definitive joint venture agreements to commercialize any of our products. As of July 31, 2011, we had cash on hand of $5,118. At that same date our liabilities totaled $4,292,604. For the year ended July 31, 2011, we had net earnings from continuing operations of $118,921. On July 31, 2011, we had a working capital surplus of $347,406 and stockholders' equity of $56,562.
We expect that we will continue to have minimal earnings or 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. 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.
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.
Item 1B. Unresolved Staff Comments.
None.
Item 2.
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 July 2011, and renews on an annual basis. The lease provides for an aggregate annual payment of $15,600. We believe our current facilities will generally be adequate for our needs for the foreseeable future. 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. On May 27, 2011, the Company entered into a loan adjustment agreement with Bayview which decreased the monthly payments to $5,433, including interest. In 2013, Bayview 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.
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.
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 not current with these payments, and there is a balance of $4,263 that is currently due.
Internal Revenue Service
We have an outstanding balance due the IRS of $302,278 for the Company’s 940 and 941 payroll taxes for the first quarter 2009 through the second quarter 2011 and at July 31, 2011. Under a payment agreement we are paying $2,500 per month, with payment increasing to $5,000 in August 2012. Our payments are currently up to date through September 30, 2011.
Javad Hajihadian
Javad Hajihadian, an individual. Mr. Hajihadian 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,. Mr. Hajihadian’s attorney subsequently contacted the Company to cancel his contract and have his payment refunded. The parties had reached a settlement agreement and the payment was being refunded with interest. The settlement agreement was for $102,500 and stipulated monthly payments of $10,250 commencing in July 2010. Payments were made through November 2010, totaling $51,250, leaving a balance of five payments or $51,250 still due; which is reflected on the Company’s balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation and on February 4, 2011, a judgment was issued in his favor for $51,750.
Item 4.
Item 4. [Removed and Reserved]
PART II
Item 5.
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:
(1)
A one-for-two reverse split was effective February 1, 2010.
(2)
A 20% stock dividend was paid effective May 28, 2010, on the common stock.
The above quotations are taken from information provided by Google and reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
Holders of Common Stock
As of October 17, 2011, we had 187 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.
All stock options under all plans have been granted, exercised and issued. Currently the Company has no options warrants or rights available.
Sales of Unregistered Securities
The following table sets forth the unreported sales of unregistered securities for the last three years.
Date
Title and Amount (1)
Purchaser
Principal
Underwriter
Total Offering Price/
Underwriting
Discounts
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
10,000,000 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
May 28, 2010
5,007,897 shares of common stock issued as collateral security pursuant to Loan Agreement, dated May 5, 2008, between the Company and Winsor Capital Inc. Shares issued pursuant to anti-dilution provisions in Loan Agreement.
Winsor Capital, Inc.
NA
NA/NA
Item 6.
Item 6. Selected Financial Data.
Not applicable.
Item 7.
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.
Results of Operations for the Year Ended July 31, 2011
Electric Vehicle Operations
We did not have any sales for our electric vehicles during the fiscal year ended July 31, 2011. Our only sales during fiscal year ended July 31, 2011, were for vehicle parts which totaled $7,013.
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 Sky Power, 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.
Sky Power License Agreement
We entered into a License Agreement (“Sky Power License Agreement”) with Sky Power in April 2008, providing for our license to Sky Power of our patent applications and technologies for rechargeable lithium ion batteries for hybrid vehicles and other applications (“Licensed Products”). Under the Sky Power License Agreement, we have the right to purchase our requirements of lithium ion batteries from Sky Power, and our requirements of lithium ion batteries shall be supplied by Sky Power in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for other customers of Sky Power. Our cost for lithium ion batteries purchased from Sky Power shall be Sky Power’s actual manufacturing costs for such batteries for the fiscal quarter of Sky Power in which our purchase takes place. On May 25, 2010, the Sky Power License Agreement was amended to reflect Sky Power’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.
Sky Power 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, To date, Sky Power 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 Sky Power 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.
On May 25, 2010 the Sky Power License Agreement was amended to limiting the license granted to Sky Power to only the United States, permitting Li-ion to grant other licenses to companies in other parts of the world.
Lithium Electric Vehicle Corp. 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.
The license agreement provides for an annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party. LEVC is required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year. The Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2011, which is now delinquent. The Company has not reflected the amount due from LEVC but has recorded the amount received as deferred revenue and amortized the license fee income ratably over the period. License agreement revenue recognized for the fiscal year ended July 31, 2011 and 2010, was $704,167 and $83,333, respectively. The Company will continue to recognize license fee income ratably over the life of the agreement.
Cost of Sales
Cost of sales as a percentage of net sales for the fiscal year ended July 31, 2011, was approximately 246% as compared to approximately 105% during the same period in 2010. The increase is primarily attributed to freight charges incurred for a shipment of a vehicle sold in the prior fiscal year of $15,000. Adjusted cost of sales percentages would be 32% and 108% for fiscal year ended July 31, 2011 and 2010, respectively, for the freight charges to be included in the correct period. 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.
General and Administrative Expenses
General and administrative (“SG&A”) expenses decreased to $1,448,274 for the fiscal year ended July 31, 2011, as compared to $2,428,622 during the same period in 2010. The decrease was attributable to: (1) $945,287 reduction in the provision of the Sky Power promissory note; (2) salaries and wages expense of $174,924; (3) professional fees for $93,212; (4) non-employee stock option expense of $70,000; (5) travel expense of $30,854; (6) legal fees of $26,913; (7) insurance expense of $23,244 and (8) and (9) other miscellaneous expenses of $65,387. These reductions were offset by increase in expenditures of: (1) marketing and advertising expense of $322,059; (2) financing related activity fees of $58,680; (3) penalties of $53,638; and (4) directors fees of $15,096. 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, 2011, amounted to $1,261,478 and $1,107,532 for year ending July 31, 2010. Parts and supplies, shipping charges, and battery management systems expensed to R&D were $56,789 and $156,888 for the year ending July 31, 2011 and July 31, 2010, 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 $422,156 for the fiscal year ended July 31, 2011 as compared to $505,371 for 2010. The decrease was due to the conversion of debt to the Company’s common stock. Interest expense consists primarily of interest related to borrowings.
Other Income
Effective April 16, 2008, Sky Power 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 Sky Power for, Sky Power’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 $2,894 the monthly rental to be escalated five (5%) percent annually.
Other income for the year ended July 31, 2011, consisted primarily of (1) accounting fees and rental income from Sky Power for $72,625; (2) interest income from the LEVC Note of $118,440; (3) forgiveness of debt of $123,621; and (4) net proceeds of $2,303,790 from X-Prize.
Other income for the fiscal year end July 31, 2010 consisted of (1) receipt of an assignment of judgment for $21,114; (2) accounting fees and rental income from Sky Power for $70,894; and (3) forgiveness of debt of $117,656.
Net Loss
Net earnings attributable to common stockholders for the fiscal year ended July 31, 2011, increased to $118,921 from a net loss of $3,933,604 for the previous fiscal year. Basic and diluted earnings attributable to common stockholders per share of common stock for the fiscal year ended July 31, 2011, was $0.00 as compared to a loss of $0.22 for the fiscal year ended July 31, 2010.
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, 2011, we had liabilities of $4,292,604, as compared with $7,960,959 at July 31, 2010; and working capital of $347,406 and stockholders' equity of $56,562.
Our property, plant and equipment increased to $1,983,739 at July 31, 2011, as compared with $1,919,681 at July 31, 2010.
We used net cash in operating activities of $1,170,778 in the year ended July 31, 2010, as compared with $2,336,670 in 2010, and cash used in investing activities was $135,157 in 2010, as compared with $22,857 in 2010.
During the year ended July 31, 2011, from the issuance of a promissory note for a receivable, we advanced $208,587 to Sky Power and was repaid $287,467. During the year ended July 31, 2011, we received net proceeds of $2,403,163 from the issuance of promissory notes for debt, and made repayments of $1,172,342. Total cash provided by financing activities in the year ended July 31, 2011 was $1,309,701 as compared with $2,351,481 in 2010.
On May 5, 2008, the Company entered into a loan agreement with Crystal Capital Ventures Inc. and on October 1, 2010, the loan was assigned to Starglow Asset, Inc. (“Starglow”). The loan agreement provided 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 loan bore an interest payable monthly in arrears at the rate of 10% per annum, and initially matured on May 4, 2012. The loan under the loan agreement was secured by shares of the Company’s common stock held by Starglow. The Company was 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. After the 1:3 reverse stock split in February 2009 the Company issued 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 loan agreement with the 1:2 reverse stock split of February 1, 2010, the Company issued 3,749,999 shares to again increase their holdings to 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.
On April 19, 2011, Starglow converted the entire $3,000,000 outstanding loan amount for the 7,500,000 collateralized shares and the Company issued a Stock Purchase Warrant (“Starglow Warrant”) which entitles Starglow, for a three-year period, to purchase at a purchase price of $.001 per share, on a one time basis and only following the effectiveness of the first reverse split of the Company’s common stock following the issuance of the Starglow Warrant , such number of shares of common stock as is equal to the difference between 7,500,000 and the number of shares into which such 7,500,000 shares were changed in such first reverse split, the effect of the Starglow Warrant being to protect Starglow from any dilution to its 7,500,000 share holding resulting from such first reverse split.
On February 26, 2010, the Company entered into a loan agreement with 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, was entered into which amended the term of the note to provide for interest only payments, due on the last day of every month until maturity date March 30, 2011 when all principal and accrued interest shall be due and payable. On April 11, 2011, Frontline assigned $850,279 of its debt to Winsor Capital, Inc. (“Winsor”). On April 19, 2011 Frontline partially assigned $437,309 to Kisumu S.A. (“Kisumu”) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a strike price of $0.42 per share. On April 19, 2011 Frontline assigned $420,000 to Eurolink Corporation (“Eurolink”) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a strike price of $0.42 per share.
On April 15, 2010 the Company entered into a loan agreement for $2,000,000 with Winsor. The loan provided 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 was secured by 12,000,000 shares of the Company common stock. Each loan installment matured in three years from issuance of the installment. The loan had an anti-dilution clause for the stock issued as collateral. Stock is issued and delivered proportionately to the delivery of funds. The loan was fully funded during the third quarter ending April 30, 2011 with (1) cash advances of $250,000; (2) debt assignment from Frontline of $850,279; (3) accrued interest of $33,534; and (4) $97,528 in cash advance fees.
On April 19, 2011, Winsor converted the entire $2,000,000 outstanding loan amount for the 10,000,000 collateralized shares and the Company issued a Stock Purchase Warrant (“Winsor Warrant”) which entitles Winsor, for a three-year period, to purchase at a purchase price of $.001 per share, on a one time basis and only following the effectiveness of the first reverse split of the Company’s common stock following the issuance of the Winsor Warrant , such number of shares of common stock as is equal to the difference between 10,000,000 and the number of shares into which such 10,000,000 shares were changed in such first reverse split, the effect being to protect Winsor from any dilution to its 10,000,000 share holding resulting from such first reverse split.
Liquidity Issues
On October 27, 2010, we received the $2,500,000 in funds for the X-Prize award, from the competition sponsored by Progressive Insurance Casualty Company. 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.
The Company has substantial obligations to the Internal Revenue Service and other creditors. The Company is working toward a payment plan with the Internal Revenue Service (IRS) for delinquent payroll taxes, and have a plan in place with one of two judgment creditors. There is no assurance that we will be able raise additional required capital to meet obligations arising from the settlements of these obligations and litigation matters, as well as the settlement payments with the IRS, and continue operations.
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, which are in addition to payments we will owe to judgment creditors and the IRS.
We do not currently have any additional 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.
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.
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.
Item 8. Financial Statements and Supplementary Data.
LI-ION MOTORS, CORP.
CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2011 and 2010
Madsen & Associates, CPA's Inc.
684 East Vine Street
Murray, UT 84107
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Madsen & Associates, CPA's Inc.
684 East Vine Street
Murray, UT 84107
Board of Directors
Li-ion Motors Corp.
Las Vegas, NV
We have audited the accompanying consolidated balance sheets of Li-ion Motors Corp. (formerly EV Innovations, Inc.) (collectively, the “Company”) as of July 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficiency) and cash flows for the years 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.
We conducted our audits 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 consolidated financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the 2011 and 2010 financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2011 and 2010, and the results of its operations and its cash flows each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company did not have any revenue from vehicle sales in 2011, does not have cash flows to support its current operations and need reserve to cover expenses in future periods as the Company continues to incur losses from operations. These factors and others described in Note 1 raise substantial doubt about the Company’s ability to continue as a going concern.
These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary in the event the Company cannot continue in existence.
/s/ Madsen & Associates, CPA's Inc.
Madsen & Associates, CPA's Inc.
November 9, 2011
Li-ion Motors Corp.
(Formerly EV Innovations, Inc.)
Consolidated Balance Sheets
See accompanying notes to consolidated financial statements
Li-ion Motors Corp.
(Formerly EV Innovations, Inc.)
Consolidated Statements of Operations
See accompanying notes to consolidated financial statements
Li-ion Motors Corp.
(Formerly EV Innovations, Inc.)
Consolidated Statement of Comprehensive Income (Loss)
See accompanying notes to consolidated financial statements
Li-ion Motors Corp.
(Formerly EV Innovations, Inc.)
Consolidated Statements of Cash Flows
See accompanying notes to consolidated financial statements
Li-ion Motors Corp.
(Formerly EV Innovations, Inc.)
Consolidated Statement of Stockholders' Equity (Deficiency)
For the Periods Ended As Noted
See accompanying notes to consolidated financial statements
Li-ion Motors Corp.
(Formerly EV Innovations, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended and as of July 31, 2011 and 2010
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 is currently pursuing the development and marketing of electric powered vehicles and products based on the advanced lithium battery technology it has developed.
On April 16, 2008, the Company sold their controlling interest of approximately 69% of the outstanding common stock in Zingo, Inc. (presently Sky Power Solutions Corp., “SPS”). Prior to April 16, 2008, SPS 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 SPS providing for their license to SPS 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 SPS, and their requirements of lithium ion batteries shall be supplied by SPS in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for other customers of SPS. The Company’s cost for lithium ion batteries purchased from SPS shall be SPS’s actual manufacturing costs for such batteries for the fiscal quarter of SPS in which the Company’s purchase takes place. On May 25, 2010, the license agreement was amended to reflect Sky Power’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, SPS 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, SPS 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 SPS 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.
The license agreement consists of an annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party. LEVC is required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year. The Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2011, which is now delinquent. The Company has not reflected the amount due from LEVC but has recorded the amount received as deferred revenue and amortized the license fee income ratably over the period. If LEVC does not pay the balance of the fee, the Company will record the receivable and establish a reserve for doubtful accounts. The Company will continue to recognize license fee income ratably over the life of the agreement.
The Company is currently in discussions with LEVC regarding the delinquency. LEVC is attempting to complete a public registration in Germany. As part of the registration statement, LEVC is required to be current with the Company in connection with the annual license fees. LEVC expects to make the delinquent payments to the Company prior to December 31, 2011.
The note of $1,750,000 has been reflected on the books of the Company and the fee is being amortized over the life of the ten-year agreement.
Basis of Presentation
Going Concern
The Company’s financial statements for the year ended July 31, 2011, have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company did not have any revenue from vehicle sales in 2011. Management recognized that the Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover expenses, as the Company continues to incur losses from operations.
Since its incorporation, the Company financed its operations through advances and loans from its controlling shareholders and in 2010, the Company received approximately $2.5 million as an award from Automotive XPrize (see Note 15). The Company expects to finance operations through the sale of equity or other investments as well as continued advances from shareholders for the foreseeable future, as the Company does not expect to receive significant revenue from vehicle sales until the required certifications have been received. There is no guarantee that the Company will be successful in arranging financing on acceptable terms.
The Company’s ability to raise additional capital is affected by trends and uncertainties beyond its control. The Company does not currently have any arrangements for financing and it 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 it. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include adjustments that might result from the outcome of these uncertainties.
Common Stock
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 one-for-two reverse split that was effective February 1, 2010, and the authorized shares were decreased in the same ratio to 25 million shares. Pursuant to majority stockholder consent, the authorized was increased from 25,000,000 shares to 100 million shares.
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 June 24, 2011, the Board of Directors unanimously approved an amendment to the Company’s Articles of Incorporation to increase the authorized number of shares of common stock from 100 million shares, par value $.001 per share, to 300 million shares, par value $.001 per share. The Company filed the amendment with the Secretary of State of Nevada on August 10, 2011, after mailing a Definitive Information Statement to the Company’s stockholders and the amendment was effective August 10, 2011.
All shares and per share information has been revised to give retroactive effect to the reverse stock split and stock dividend.
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:
Reclassifications
Certain prior period amounts have been reclassified to conform with current period other income presentations.
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.
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, 2011, 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, 2011 and 2010.
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, 2011 and 2010.
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, 2011.
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.
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
Accelerated
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.
Evaluation of Long-Lived Assets
The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable in accordance with the guidance in ASC 360-15-35 “Impairment or Disposal of Long-Lived Assets”. An impairment exists when the carrying amount of the long-lived assets is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists the resulting write-down would be the difference between the fair market value of the long-lived asset and the related net book value.
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, 2011, 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.
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, 2011 and 2010, customer deposits amounted to $102,287 and $100,000, 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, 2011 and 2010 and amounted to $369,034 and $73,975, 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, 2011 and 2010, were $1,261,479 and $1,107,532, respectively. Parts and supplies; battery and motor management systems; and shipping charges were $56,788 and $156,888, for the year ending July 31, 2011 and July 31, 2010, respectively. The Company expects the research and development expenses will continue to remain substantial and grow as the Company aggressively moves 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 gain for the year ended July 31, 2011, was $761 and the translation loss for the year ended July 31, 2010, was $4,977.
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, 2011 and 2010, the difference between net loss and comprehensive loss was foreign currency translation.
Net Earnings (Loss) Per Common Share
Basic earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the specified period. Diluted earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average number of common shares and potential common shares during the specified period. All potentially dilutive securities have been excluded from the computations for the year ending July 31, 2011, as their effect is anti-dilutive.
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
During the year ended July 31, 2011, the Company advanced Sky Power Solutions Corp. (“SPS”) $208,587 of which $287,467 was repaid ($173,600 in the form of cash and $113,867 in reimbursement for a leased employee). During the year ended July 31, 2010 the Company advanced SPS $1,282,988, of which $441,781 was repaid and the net amount was reserved as an allowance for doubtful accounts . As of July 31, 2011 and July 31, 2010, an allowance for doubtful accounts in the amount of $762,327 and $841,207, respectively, was recorded against the note receivable, reducing the amount to $0.
On November 26, 2010, LEVC issued the Company a Secured Promissory Note (“LEVC Note”) in the amount of $1,750,000 in accordance with the license agreement. The LEVC Note bears interest at ten (10%) percent per annum on the outstanding amount of the loan and shall accrue for the first 12 months during which the outstanding amount, or any portion thereof is outstanding. Commencing for the first month following the first year and for all subsequent months during which any portion of the amount is outstanding, LEVC shall make monthly interest payments in arrears on the first day of the month following the month for which the interest payment is made on the outstanding amount of the LEVC Note, including any accrued unpaid interest thereon. The outstanding amount and any accrued but unpaid interest thereon, shall be repaid in full by LEVC within sixty (60) days of receiving written demand for repayment by the Company. LEVC shall have the right to repay the LEVC Note in whole or in part, at any time without notice, bonus or penalty. The LEVC Note is secured by LEVC’s (1) inventory; (2) equipment, other than inventory; (3) receivables; and (4) all other property, including leasehold interests, chattel paper, documents of title, securities, instruments, money and intangibles. In addition, the LEVC Note includes a conversion right in which the Company can convert the LEVC Note if LEVC should begin trading on the TSX Venture Exchange. The conversion clause stipulates that the LEVC Note will be converted at a price the greater of fifteen cents ($0.15) per share or ninety percent (90%) of the average ten (10) day trading price and if the conversion of the LEVC Note results in a fractional share, LEVC shall, in lieu of issuing such fractional share, pay to the Company an amount equal to the conversion value of the fractional share.
The Company has assessed whether the loan is impaired and collectability is assured. LEVC is currently attempting to complete a registration in Germany. The Company has the option, upon the completion of the registration, of converting the note into LEVC common stock. LEVC believes the registration will be completed on or at December 31, 2011. The Company will further assess the collectability of the loan at that time should the registration not be completed. Management has determined no impairment existed at July 31, 2011.
The Company recognized interest income of $118,425, none of which has been received, in accordance to the terms of the LEVC Note for the year ended July 31, 2011, all of which is included in other current assets as of July 31, 2011. See Note 6 for further information.
Note 4. Inventories
Inventories consist of the following:
Raw materials, work in progress and finished goods for the year ended July 31, 2011, and year ended July 31, 2010, are related to the Company’s planned sales of electric powered vehicles.
Note 5. Property and Equipment
Property and equipment consist of:
Depreciation expense for the year ended July 31, 2011 and 2010 was $71,099 and $77,917, respectively and is included in general and administrative expenses on the Company’s consolidated statement of operations.
Note 6. Other Current Assets
The deferred product asset is for product liability costs that the Company prepared and amortized over the two year life in the amount of $20,636 and $25,594 as of July 31, 2011 and 2010, respectively and is included in accrued expenses-other.
Note 7. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses and other current liabilities at July 31, 2011 and 2010 consisted of:
Accounts payable due to related parties are reimbursable general and administrative expenses paid by the Company’s President and Consultant.
Note 8. Advances To/From Related Parties and Related Party Transactions
The Company did not have any related party transactions during the year ended July 31, 2011. For the year ended July 31, 2010, the Company received additional advances of $1,252,014 and repaid $1,349,955 in the form of cash ($210,455), common stock ($966,500), and two Li-ion manufactured electric vehicles ($173,000) from Salim, Salim, Rana Investments (“SSRI”) , a former shareholder. The balance due to SSRI at July 31, 2011 and 2010, was $0 and $0, respectively.
Note 9. Long-Term Debt
Long-term debt consists of:
Principal maturities for long-term debt are as follows for the years ended July 31:
(1) In November 2007, the Company refinanced a loan on its North Carolina building. The loan is with Bayview Loan Servicing, LLC (“Bayview”). On March 31, 2010, the Company entered into a stipulation agreement with Bayview which reduced the monthly payment to $5,349, including interest. On May 27, 2011, the Company entered into a loan adjustment agreement with Bayview which increased the unpaid liability by $9,043 to $953,316 and decreased the monthly payments to $5,433, including interest. In 2013, Bayview 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, 2011 and 2010, was $34,753 and $95,286, respectively.
(2) On May 5, 2008, the Company entered into a loan agreement with Crystal Capital Ventures Inc. and on October 1, 2010, the loan was assigned to Starglow Asset, Inc. (“Starglow”). The loan agreement provided 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 loan bore an interest payable monthly in arrears at the rate of 10% per annum, and initially matured on May 4, 2012. The loan under the loan agreement was secured by shares of the Company’s common stock held by Starglow. The Company was 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. After the 1:3 reverse stock split in February 2009 the Company issued 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 loan agreement with the 1:2 reverse stock split of February 1, 2010, the Company issued 3,749,999 shares to 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.
On April 19, 2011, Starglow converted the entire $3,000,000 outstanding loan amount for the 7,500,000 collateralized shares and the Company issued a Stock Purchase Warrant (“Starglow Warrant”) which entitles Starglow, for a three-year period, to purchase at a purchase price of $.001 per share, on a one time basis and only following the effectiveness of the first reverse split of the Company’s common stock following the issuance of the Starglow Warrant, such number of shares of common stock as is equal to the difference between 7,500,000 and the number of shares into which such 7,500,000 shares were changed in such first reverse split, the effect of the Starglow Warrant being to protect Starglow from any dilution to its 7,500,000 share holding resulting from such first reverse split.
Interest expense for the years ended July 31, 2011 and 2010, was $208,767 and $341,676, respectively.
(3) On February 28, 2011 the Company financed a liability policy (workman’s compensation) with Allegiance Direct Bank for the period February 28, 2011 to February 28, 2012 for $13,351. The Company was required to make a down payment of $3,351 in February 2011 and monthly payments including interest of 9.4%. During the year ended July 31, 2011 and 2010, the Company repaid $8,888 and $10,880, respectively. Interest expense for the year ended July 31,2011 and 2010, paid to Allegiance Direct Bank is $692 and $565, respectively.
(4) On February 26, 2010, the Company entered into a loan agreement with 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, was entered into which amended the term of the note to provide for interest only payments, due on the last day of every month until maturity date March 30, 2011 when all principal and accrued interest shall be due and payable. On April 11, 2011, Frontline assigned $850,279 of its debt to Winsor Capital, Inc. (“Winsor”). On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A. (“Kisumu”) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a strike price of $0.42 per share. On April 19, 2011 Frontline assigned $420,000 to Eurolink Corporation (“Eurolink”) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a strike price of $0.42 per share.
During the year ended July 31, 2011 and 2010, the Company received advances totaling $ 1,968,314 and $ 1,635,210, respectively; and made payments of $1,146,665and $399,807, respectively. Interest expense for the year ended July 31, 2011 and 2010, was $101,522 and $42,341, respectively.
(5) On April 15, 2010, the Company entered into a loan agreement for $2,000,000 with Winsor Capital Inc. (“Winsor”). The loan provided 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 was secured by 10,000,000 shares of the Company common stock. Each loan installment matured in three years from issuance of the installment. The loan had an anti-dilution clause for the stock issued as collateral. Stock is issued and delivered proportionately to the delivery of funds. The loan was fully funded with (1) cash advances of $916,492; (2) debt assignment from Frontline of $850,279; (3) accrued interest of $33,534; and (4) $199,695 in cash advance fees.
On April 19, 2011, Winsor converted the entire $2,000,000 outstanding loan amount for the 10,000,000 collateralized shares and the Company issued a Stock Purchase Warrant (“Winsor Warrant”) which entitles Winsor, for a three-year period, to purchase at a purchase price of $.001 per share, on a one time basis and only following the effectiveness of the first reverse split of the Company’s common stock following the issuance of the Winsor Warrant , such number of shares of common stock as is equal to the difference between 10,000,000 and the number of shares into which such 10,000,000 shares were changed in such first reverse split, the effect being to protect Winsor from any dilution to its 10,000,000 share holding resulting from such first reverse split.
Interest expense for the year ended July 31, 2011 and 2010, was $56,537 and $19,139, respectively.
(6) On March 11, 2011, the Company financed $7,992 for office equipment with Amicus Funding Group, LLC (“Amicus”) and monthly payments including interest of 48.956% are approximately $477. During the year ended July 31, 2011 and 2010, the Company repaid $598 and $0, respectively. Interest expense for the year ended July 31, 2011 and 2010, was $1,269 and $0, respectively.
(7) On February 1, 2011, the Company financed $29,750 for production equipment with Treger Financial (“Treger”) and monthly payments including interest of 26.85% are approximately $2,000. During the year ended July 31, 2011 and 2010, the Company repaid $5,627 and $0, respectively. Interest expense for the year ended July 31, 2011 and 2010, was $3,996 and $0, respectively.
8) The Company entered into a Loan Agreement, dated as of July 14, 2011, with Cameo Properties LLC (the “Lender”) and was amended on October 14, 2011 (the “Amended Loan Agreement”). Each Note issued under the Amended Loan Agreement is due three years from the date of its issuance. The Amended Loan Agreement provides for loans to the Company of up to $750,000 (the “Loan”), with a minimum initial loan of $250,000 within 60 days of the date of the Loan Agreement, and up to an additional $500,000 within the first year and a half from execution of the Amended Loan Agreement. This is not a revolving facility, and any principal repaid by the Company will not be available for additional advances to the Company under the Amended Loan Agreement. The Company cannot, without the Lender’s consent prepay all or part of the Loan. The notes evidencing the installments of the loans bear interest payable monthly in arrears at the rate of 10% per annum, and mature and are due and payable three years from the date of issuance.
As of July 31, 2011, no funding transactions had taken place and there was a zero balance on the Note.
Note 10. Stockholders’ Equity (Deficiency)
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 held 7.5 million post reverse stock split shares. Concurrent with the 1:2 reverse stock split the authorized shares were also reduced from 50 million to 25 million shares. By motion of the Board, May 17, 2010 the authorized were increased from 25 million common shares to 100 million common shares.
On April 15, 2010, the Company entered into a loan agreement for $2,000,000 with Winsor. The entire loan amount was secured by 10,000,000 shares of the Company common stock. On April 19, 2011, Winsor converted the entire $2,000,000 outstanding loan amount for the 10,000,000 collateralized common stock.
On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A. (“Kisumu”) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a strike price of $0.42 per share. On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation (“Eurolink”) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a strike price of $0.42 per share.
On April 19, 2011, Starglow, (formerly Crystal Capital Ventures) converted the entire $3,000,000 outstanding loan amount for the 7,500,000 collateralized shares.
On April 19, 2011, Winsor converted the entire $2,000,000 outstanding loan amount for the 10,000,000 collateralized shares.
On July 14, 2011, the Company entered into a Loan Agreement with Cameo Properties LLC. The loans under the Loan Agreement are secured by 20 million shares of our common stock held as treasury stock and will be issued to the Lender when the Company receives the initial advance on the note. In the event of a reverse stock split or combination of shares, the number of shares of common stock constituting the Share Collateral will, immediately following such reverse stock split or combination of shares, be increased by a new issuance of common stock of the Company to that number of shares constituting the Share Collateral immediately prior to such reverse stock split or combination of shares. The certificates representing any share dividends that we pay during the term of the Loan with respect to the Shares being held in escrow shall be credited and delivered to the Lender and held by the Lender pursuant to the terms of the Loan Agreement.
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 the 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 filed the amendment with the Secretary of State on Nevada on May 4, 2010, after mailing a Definitive Information Statement to the Company’s stockholders and the amendment was effective May 17, 2010.
On June 24, 2011, the Board of Directors unanimously approved an amendment to the Articles of Incorporation to increase the authorized number of shares of common stock from 100 million shares, par value $.001 per share, to 300 million shares, par value $.001 per share. The Company filed the amendment with the Secretary of State of Nevada on August 10, 2011, after mailing a Definitive Information Statement to the Company’s stockholders and the amendment was effective August 10, 2011.
Note 11. Net Earnings (Loss) Per Common Share
The following table sets forth the reconciliation of the basic and diluted net earnings (loss) per common share computations for the years ended July 31, 2011 and 2010.
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” (“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 Option Plan
As of July 31, 2011, 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, 2011 and 2010.
Employee stock compensation expense applicable to stock options for the years ended July 31, 2011 and 2010 was $0 and $0, respectively. The aggregate intrinsic value of options outstanding as of July 31, 2011 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 million 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, 2011 and 2010, the Company granted zero and 500,000 options, respectively with an option price of $0.00 and $0.70 per share, respectively, to various consultants. During the years ended July 31, 2011 and 2010, zero and 500,000 options, respectively, were vested at the fair market value of which was determined under the Black-Scholes formula to be approximately $0 and $70,000 and is included in general and administrative expenses. During the years ended July 31, 2011 and 2010, zero and 1,185,000 options were exercised and issued, respectively valued at $0.00 and $1.15 per share.
During the years ended July 31, 2011 and 2010, total related advances converted in return for the exercise and issuance of options under the plan amounted to approximately $0 and $976,000, 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, 2011 and 2010.
A reconciliation of taxes on income computed at federal statuary rate to the amount provided is as follows:
Components of deferred income tax assets are as follows:
The net operating loss carry forward as of July 31, 2011, is approximately $62.6 million and will expire in years through 2025.
Note 14. Commitments and Contingencies
Lease Agreement
Our principal executive office is located in Las Vegas, Nevada. We lease approximately 1,900 square feet under a lease agreement that commenced in July 2011, and renews on an annual basis. The lease provides for an aggregate annual payment of $15,600. We believe our current facilities will generally be adequate for our needs for the foreseeable future.
Effective April 16, 2008, SPS agreed to lease approximately 5,000 square feet of space in the Company’s North Carolina facility at a rental rate of $2,500 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 SPS for, SPS’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 $2,984. Although the lease was signed, the space is only 80% completed as of July 31, 2011. The Company also entered into a month to month lease agreement for $750 with SPS for renting offices in the Company’s Las Vegas corporate office.
Total rental income for the years ended July 31, 2011 and 2010 was $42,625 and $40,894, respectively.
Surety Bond
The Company renewed the manufacturing license with the North Carolina Department of Motor Vehicles. This license requires a surety bond of $50,000 for three years which the Company acquired from Kaercher Campbell & Associates and is effective through February 18, 2012. 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, 2012.
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.
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 is not current with the its payment arrangements and has a balance of $4,263 still due.
Internal Revenue Service served the Company with a tax lien dated March 3, 2010 in the total amount of $251,928. Third quarter 2009 taxes are approximately $117,000, which are included in total due. The Company has been served with an additional tax lien dated January 19, 2011, in the amount of $2,925. The Company has a payment plan in place with the Internal Revenue Service (“IRS”).
Tallman Hudders & Sorrentino has obtained a judgment in Lehigh County, Pennsylvania, on behalf of their client Javad Hajihadian, an individual. Mr. Hajihadian 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. Mr. Hajihadian’s attorney subsequently contacted the Company to cancel his contract and have his payment refunded. The parties had reached a settlement agreement and the payment was being refunded with interest. The settlement agreement was for $102,500 and stipulated monthly payments of $10,250 commencing in July 2010. Payments were made through November 2010, totaling $51,250, leaving a balance of five payments or $51,250 still due; which is reflected on the Company’s balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation and on February 4, 2011, a judgment was issued in his favor for $51,750.
Note 15. Other Miscellaneous Income
(1) The Progressive Insurance Automotive X-Prize, (“X-Prize”), 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 net proceeds of approximately $2.3 million from X-Prize and was recorded as other income in the Company’s consolidated statement of operations for the year ended July 31, 2011.
(2) Other income for the year ended July 31, 2011, consisted primarily of (a) accounting fees and rental income from Sky Power for $72,625; (b) interest income from the LEVC Note of $118,440; (c) forgiveness of debt in connection with the adjustment of previously recorded accounts payable of $123,621; and (d) net proceeds of $2,303,790 from X-Prize (see 1 above). Other income for the fiscal year end July 31, 2010 consisted of (a) receipt of an assignment of judgment for $21,114; (b) accounting fees and rental income from Sky Power for $70,894; and (c) forgiveness of debt in connection with the adjustment of previously recorded accounts payable of $117,656.
Item 9.
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A
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 Principal Financial Officer, to allow timely decisions regarding required disclosure.
As of July 31, 2011, 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 effective.
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, 2011. 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 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, 2011, 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 2011 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.
Item 9B. Other Information.
None.
PART III
Item 10.
Item 10. Directors, Executive Officers, and Corporate Governance.
Our executive officers and directors and their respective ages as of October 31, 2011 are as follows:
Name
Age
Position
Stacey Fling
Chief Executive Officer, President and Director
Holly. Roseberry
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. Ms. Fling was initially involved in the founding of the Company and has been involved in the management of a number of businesses. We believe that she contributes valuable management and negotiation skills to the management and operations of our Company.
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 valuable advice based on her experience with the Company.
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, 2011, all such filing requirements applicable to its officers and directors were complied with.
Item 11.
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, 2011, 2010, and 2009. No other compensation was paid to any such officer or director other than the cash compensation set forth below.
Summary Compensation Table
* Years ended July 31, 2011, 2010 and 2009.
** 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 2011, 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, 2011.
Director Compensation
* Stacey Fling has acted as a director since May 1, 2009; 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.
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 17, 2011, 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.
* Less than 1%
(1)
As of October 17, 2011, there were 32,088,406 shares of our common stock outstanding.
Change in Control
We are not aware of any arrangement that might result in a change in control in the future.
Item 13.
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.
Effective April 15, 2008, the Company entered into a License Agreement (“License Agreement”) with Sky Power Solutions Corp. (“SPS”) providing for their license to Sky Power 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 Sky Power, 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 SPS. The Company’s cost for lithium ion batteries purchased from SPS shall be SPS’s actual manufacturing costs for such batteries for the fiscal quarter of SPS 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, SPS 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, SPS 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 SPS 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 April 16, 2008, SPS agreed to lease approximately 5,000 square feet of space in the Company’s North Carolina facility at a rental rate of $2,500 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 SPS for, SPS’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 $2,894. Although the lease was signed, the space is only 80% completed as of July 31, 2011. 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.
Item 14. Principal Accountant Fees and Services.
(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.
Item 15.
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. (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.)
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.)
3.1j
Certificate of Amendment to Articles of Incorporation, filed effective August 10, 2011. (Incorporated by reference to Exhibit 3.1j to the Company’s Current Report on Form 8-K, filed with the Commission on August 16, 2011.)
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.)
4.3
EV Innovations, Inc. 2005 Restricted Stock Plan. (Incorporated herein by reference to Exhibit 4. to the Company's Registration Statement on Form S-8 filed with the Commission on April 22, 2005.)
4.4
Promissory Note, dated December 3, 2004, payable to Trade Winds Telecom, LLC. (Incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-KSB, filed with the Commission on May 23, 2005.)
10.1
Mineral Claim dated October 2, 2000.(Incorporated herein by reference to Exhibit 10.1 to the Company's Registration Statement on Form SB-2 filed with the Commission on May 29, 2001.)
10.2
Mineral Property Staking and Sales agreement, dated 20 September 19, 2000, between Mr. Edward McCrossan and the Company. (Incorporated herein by reference to Exhibit 10.2 to the Company's Registration Statement on Form SB-2 filed with the Commission on May 29, 2001.)
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.)
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.)
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 Sky Power 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 Sky Power 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.)
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 Sky Power Power, Inc., filed herewith.
10.38
Stock Purchase Warrant, dated April 19, 2011, issued to Starglow Asset, Inc. (Incorporated by reference to Exhibit 10.38 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on June 14, 2011.)
10.39
Stock Purchase Warrant, dated April 19, 2011, issued to Winsor Capital, Inc. (Incorporated by reference to Exhibit 10.39 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on June 14, 2011.)
Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
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.
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.