x |
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o |
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
NEVADA
|
82-0497807
|
(State
or other jurisdiction
|
(IRS
Employer
|
of
incorporation)
|
Identification
No.)
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
|||
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Class
|
Outstanding
at April 28, 2008
|
|
Series
B Preferred
|
1,932,846
|
|
Common
|
27,590,164
|
.
|
Page
|
||
PART
I
|
FINANCIAL
INFORMATION
|
||
Item
1.
|
Condensed
Consolidated Financial Statements
|
4
|
|
|
|||
Condensed
Consolidated Balance Sheets as of March 31, 2008 (unaudited)
and
December 31, 2007
|
4
|
||
Condensed
Consolidated Statements of Operations for the Three Months
Ended
March 31, 2008 and 2007 and the period from inception
(May
19, 2003) through March 31, 2008 (unaudited)
|
6
|
||
Condensed
Consolidated Statements of Cash Flows for the Three Months
Ended
March 31, 2008 and 2007 and the period from inception
(May
19, 2003) through March 31, 2008 (unaudited)
|
7
|
||
Notes
to Consolidated Financial Statements (unaudited)
|
9
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition
and
Results of Operations
|
21
|
|
Item
4T.
|
Controls
and Procedures
|
29
|
|
PART
II.
|
OTHER
INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
30
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
30
|
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
31
|
|
Notes
About Forward-looking Statements
|
31
|
||
SIGNATURES
|
32
|
March
31,
|
December
31,
|
||||||
ASSETS
|
2008
|
2007
|
|||||
(Unaudited)
|
|
||||||
(Restated)
|
(Restated)
|
||||||
Current
Assets
|
|||||||
Cash
and cash equivalents
|
$
|
161,578
|
$
|
713,289
|
|||
Restricted
cash
|
116,454
|
115,157
|
|||||
Accounts
receivable
|
112,135
|
134,237
|
|||||
Inventories
|
1,578,085
|
1,655,359
|
|||||
Prepaid
expenses
|
78,786
|
89,901
|
|||||
Total
current assets
|
2,047,038
|
2,707,943
|
|||||
Property,
Plant and Equipment
|
|||||||
Building
|
2,271,209
|
2,271,209
|
|||||
Equipment
|
899,391
|
908,999
|
|||||
Land
and improvements
|
472,504
|
472,504
|
|||||
3,643,104
|
3,652,712
|
||||||
Less
accumulated depreciation
|
431,285
|
375,178
|
|||||
Net
property and equipment
|
3,211,819
|
3,277,534
|
|||||
Total
Assets
|
$
|
5,258,857
|
$
|
5,985,477
|
March
31,
|
December
31,
|
||||||
LIABILITIES
AND EQUITY
|
2008
|
2007
|
|||||
(Unaudited)
|
|
||||||
(Restated)
|
(Restated)
|
||||||
Current
Liabilities
|
|||||||
Notes
payable, banks
|
$
|
580,046
|
$
|
594,677
|
|||
Current
portion long-term debt
|
43,337
|
30,350
|
|||||
Current
installments of obligation under capital lease
|
46,637
|
45,247
|
|||||
Accounts
payable
|
156,207
|
146,585
|
|||||
Accrued
expenses
|
221,964
|
207,328
|
|||||
Accrued
interest
|
141,220
|
129,965
|
|||||
Unearned
grants
|
24,184
|
30,977
|
|||||
Total
current liabilities
|
1,213,595
|
1,185,129
|
|||||
Long-term
debt, net of current maturities
|
1,310,625
|
1,338,235
|
|||||
Obligation
under capital lease, excluding current
installments
|
68,761
|
80,955
|
|||||
1,379,386
|
1,419,190
|
||||||
Total
liabilities
|
2,592,981
|
2,604,319
|
|||||
Commitments
and Contingencies
|
|||||||
Stockholders'
Equity
|
|||||||
Preferred
stock - Series B, $0.001 par value; 5,000,000 shares
authorized,
|
|||||||
1,932,846
shares issued and outstanding
|
1,933
|
1,933
|
|||||
Common
stock, $0.001 par value; 100,000,000 shares authorized,
|
|||||||
27,590,164
shares issued and outstanding
|
27,590
|
27,590
|
|||||
Additional
paid-in capital
|
16,009,012
|
15,860,725
|
|||||
Accumulated
other comprehensive loss - foreign currency
|
(7,938
|
)
|
(3,412
|
)
|
|||
Deficit
accumulated during the development stage
|
(13,364,721
|
)
|
(12,505,678
|
)
|
|||
Total
stockholders' equity
|
2,665,876
|
3,381,158
|
|||||
Total
Liabilities and Stockholders’ Equity
|
$
|
5,258,857
|
$
|
5,985,477
|
Three
months ended
|
From
Inception
|
|||||||||
March
31,
|
(May
19, 2003) to
|
|||||||||
2008
|
2007
|
March
31, 2008
|
||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||
(Restated)
|
(Restated)
|
(Restated)
|
||||||||
Sales
|
$
|
161,685
|
$
|
238,290
|
$
|
1,224,388
|
||||
Cost
of Goods Sold
|
||||||||||
Material,
labor, and overhead
|
150,367
|
202,664
|
1,072,151
|
|||||||
Inventory
markdown (recovery)
|
(11,904
|
)
|
-
|
950,119
|
||||||
138,463
|
202,664
|
2,022,270
|
||||||||
Gross
Profit (Loss)
|
23,222
|
35,626
|
(797,882
|
)
|
||||||
Operating
Expenses
|
||||||||||
Sales
and marketing
|
84,065
|
88,514
|
1,285,101
|
|||||||
General
and administrative
|
570,904
|
823,422
|
7,042,312
|
|||||||
Research
and development
|
191,266
|
407,357
|
3,441,769
|
|||||||
Vendor
settlement
|
-
|
448,011
|
577,500
|
|||||||
846,235
|
1,767,304
|
12,346,682
|
||||||||
Operating
Loss
|
(823,013
|
)
|
(1,731,678
|
)
|
(13,144,564
|
)
|
||||
Other
Income (Expense)
|
||||||||||
Interest
income
|
4,429
|
11,501
|
168,481
|
|||||||
Interest
expense
|
(40,459
|
)
|
(41,637
|
)
|
(381,904
|
)
|
||||
Loss
on sale of asset
|
-
|
-
|
(6,734
|
)
|
||||||
(36,030
|
)
|
(30,136
|
)
|
(220,157
|
)
|
|||||
Net
Loss
|
$
|
(859,043
|
)
|
$
|
(1,761,814
|
)
|
$
|
(13,364,721
|
)
|
|
Series
A Preferred stock beneficial conversion
|
||||||||||
feature
accreted as a dividend
|
$
|
-
|
$
|
(1,889,063
|
)
|
$
|
(1,889,063
|
)
|
||
Net
Loss Attributable To Common Stockholders
|
$
|
(859,043
|
)
|
$
|
(3,650,877
|
)
|
$
|
(15,253,784
|
)
|
|
Weighted
-average shares outstanding
|
27,498,164
|
25,472,024
|
||||||||
Basic
and diuluted net loss per share
|
(0.03
|
)
|
(0.14
|
)
|
Three
Months Ended
|
From
Inception
|
|||||||||
|
March
31,
|
(May
19, 2003) to
|
||||||||
|
2008
|
2007
|
March
31, 2008
|
|||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||
Operating
Activities
|
||||||||||
Net
loss
|
$
|
(859,043
|
)
|
$
|
(1,761,814
|
)
|
$
|
(13,364,721
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operations:
|
||||||||||
Depreciation
|
65,715
|
57,213
|
492,558
|
|||||||
Compensation
to directors and employees of stock options and restricted
stock
|
138,005
|
136,089
|
1,512,424
|
|||||||
Compensation
to consultants of stock options
|
10,282
|
2,462
|
197,092
|
|||||||
Warrants
issued in vendor settlement
|
-
|
-
|
577,500
|
|||||||
Loss
on sale of assets
|
-
|
-
|
6,734
|
|||||||
Change
in assets and liabilities:
|
||||||||||
Accounts
receivable
|
22,102
|
(85,175
|
)
|
(112,135
|
)
|
|||||
Inventories
|
77,274
|
(362,217
|
)
|
(1,557,020
|
)
|
|||||
Prepaid
expenses
|
11,115
|
(97,240
|
)
|
(100,243
|
)
|
|||||
Accounts
payable
|
9,622
|
138,135
|
240,063
|
|||||||
Accrued
expenses
|
14,636
|
677,953
|
268,202
|
|||||||
Accrued
interest
|
11,255
|
-
|
141,220
|
|||||||
Unearned
grants
|
(6,793
|
)
|
(8,484
|
)
|
24,184
|
|||||
Net
cash used in operating activities
|
(505,830
|
)
|
(1,303,078
|
)
|
(11,674,142
|
)
|
||||
Investing
Activities
|
||||||||||
Withdrawal/(Deposit)
of restricted cash
|
(1,297
|
)
|
(3,848
|
)
|
(116,454
|
)
|
||||
Proceeds
from sale of assets
|
-
|
-
|
36,500
|
|||||||
(Purchases)/Impairment
of property, plant, and equipment
|
-
|
(39,277
|
)
|
(3,012,679
|
)
|
|||||
Net
cash used in investing activities
|
(1,297
|
)
|
(43,125
|
)
|
(3,092,633
|
)
|
||||
Financing
Activities
|
||||||||||
Proceeds
from note payable, bank
|
-
|
250,000
|
1,839,420
|
|||||||
Payments
on note payable, bank
|
(14,630
|
)
|
(2,283
|
)
|
(927,774
|
)
|
||||
Proceeds
from long-term debt
|
-
|
-
|
1,172,052
|
|||||||
Payments
on long-term debt
|
(25,428
|
)
|
(11,473
|
)
|
(169,323
|
)
|
||||
Proceeds
from exercise of stock option
|
-
|
-
|
8,000
|
|||||||
Issuance
of preferred stock (Series A) in private placement, net of
expenses
|
-
|
-
|
2,779,813
|
|||||||
Issuance
of preferred stock (Series B) in private placement, net of
expenses
|
-
|
279,000
|
3,595,095
|
|||||||
Issuance
of common stock in private placements, net of expenses
|
-
|
-
|
6,639,008
|
|||||||
Net
cash provided by (used in) financing activities
|
(40,058
|
)
|
515,244
|
14,936,291
|
||||||
Effect
of Exchange Rates on Cash and Cash Equivalents
|
(4,526
|
)
|
(1,184
|
)
|
(7,938
|
)
|
||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(551,711
|
)
|
(832,143
|
)
|
161,578
|
|||||
Cash
and Cash Equivalents – Beginning of Period
|
713,289
|
1,149,207
|
-
|
|||||||
Cash
and Cash Equivalents – End of Period
|
$
|
161,578
|
$
|
317,064
|
$
|
161,578
|
Three
months ended
|
|
From
Inception
|
|
|||||||
|
|
March
31,
|
|
(May
19, 2003) to
|
|
|||||
|
|
2008
|
|
2007
|
|
March
31, 2008
|
||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||
Supplemental
Cash Flow Information
|
||||||||||
Interest
paid
|
$
|
29,111
|
$
|
13,913
|
$
|
240,401
|
||||
Supplemental
Disclosures of Noncash Investing
and Financing Activities
|
||||||||||
Additional
paid-in capital contribution for expenses paid by founder
|
$
|
-
|
$
|
-
|
$
|
103,636
|
||||
|
||||||||||
Issuance
of common stock for equipment
|
$
|
-
|
$
|
-
|
$
|
47,851
|
||||
|
||||||||||
Issuance
of common stock for conversion of debt
|
$
|
-
|
$
|
-
|
$
|
557,051
|
||||
|
||||||||||
Acquistion
of property, plant, and equipment through
financing
|
$
|
-
|
$
|
111,450
|
$
|
692,081
|
||||
|
||||||||||
Payables
for construction in progress
|
$
|
-
|
$
|
-
|
$
|
232,208
|
||||
Receivable
for state loan
|
$
|
-
|
$
|
-
|
$
|
100,000
|
||||
|
||||||||||
Series
A Preferred stock beneficial conversion feature accreted as a
dividend
|
$
|
-
|
$
|
1,889,063
|
$
|
1,889,063
|
Period
from Inception
|
||||
(May
19, 2003) to
|
||||
March
31, 2008
|
||||
Net
loss attributable to common shareholders, as reported
|
$
|
(15,253,784
|
)
|
|
Add:
options and restricted stock-based employee compensation
|
||||
expense
included in reported net loss attributable to common
shareholders
|
1,512,424
|
|||
Deduct:
options and restricted stock-based employee compensation
|
||||
expense
determined under fair value based method
|
(1,698,226
|
)
|
||
Pro
forma net loss attributable to common shareholders
|
$
|
(15,439,586
|
)
|
March
31, 2008
As
Previously Reported
|
Adjustments
|
March
31, 2008
As
Restated
|
||||||||
Sales
|
$
|
161,685
|
$
|
-
|
$
|
161,685
|
||||
Cost
of Goods Sold
|
||||||||||
Material,
labor, and overhead
|
150,367
|
-
|
150,367
|
|||||||
Inventory
markdowns (recoveries)
|
-
|
(11,904
|
)
|
(11,904
|
)
|
|||||
|
150,367
|
(11,904
|
)
|
138,463
|
||||||
Gross
Profit (Loss)
|
11,318
|
11,904
|
23,222
|
|||||||
Losses
(recovery) related to inventory
|
(11,904
|
)
|
11,904
|
-
|
||||||
Vendor
settlement
|
-
|
-
|
-
|
|||||||
Total
Operating Expenses
|
834,331
|
11,904
|
846,235
|
|||||||
Operating
Loss
|
(823,013
|
)
|
-
|
(823,013
|
)
|
|||||
Net
Loss
|
$
|
(859,043
|
)
|
$
|
-
|
$
|
(859,043
|
)
|
March
31, 2007
As
Previously Reported
|
Adjustments
|
March
31, 2007
As
Restated
|
||||||||
Sales
|
$
|
238,290
|
$
|
-
|
$
|
238,290
|
||||
Cost
of Goods Sold
|
||||||||||
Material,
labor, and overhead
|
202,664
|
-
|
202,664
|
|||||||
Inventory
markdowns (recoveries)
|
-
|
-
|
-
|
|||||||
|
202,664
|
-
|
202,664
|
|||||||
Gross
Profit (Loss)
|
35,626
|
-
|
35,626
|
|||||||
Losses
(recovery) related to inventory
|
448,011
|
(448,011
|
)
|
-
|
||||||
Vendor
settlement
|
-
|
448,011
|
448,011
|
|||||||
Total
Operating Expenses
|
1,767,304
|
-
|
1,767,304
|
|||||||
Operating
Loss
|
(1,731,678
|
)
|
-
|
(1,731,678
|
)
|
|||||
Net
Loss
|
$
|
(1,761,814
|
)
|
$
|
-
|
$
|
(1,761,814
|
)
|
Inception
to
March
31, 2008
As
Previously Reported
|
Adjustments
|
Inception
to
March
31, 2008
As
Restated
|
||||||||
Sales
|
$
|
1,224,388
|
$
|
-
|
$
|
1,224,388
|
||||
Cost
of Goods Sold
|
||||||||||
Material,
labor, and overhead
|
1,072,151
|
-
|
1,072,151
|
|||||||
Inventory
markdowns (recoveries)
|
-
|
950,119
|
950,119
|
|||||||
|
1,072,151
|
950,119
|
2,022,270
|
|||||||
Gross
Profit (Loss)
|
152,237
|
(950,119
|
)
|
(797,882
|
)
|
|||||
Losses
(recovery) related to inventory
|
1,527,619
|
(1,539,523
|
)
|
-
|
||||||
Vendor
settlement
|
-
|
577,500
|
577,500
|
|||||||
Total
Operating Expenses
|
13,296,801
|
(950,119
|
)
|
12,346,682
|
||||||
Operating
Loss
|
(13,144,564
|
)
|
-
|
(13,144,564
|
)
|
|||||
Net
Loss
|
$
|
(13,364,721
|
)
|
$
|
-
|
$
|
(13,364,721
|
)
|
March
31, 2008
As
Previously Reported
|
Adjustments
|
March
31, 2008
As
Restated
|
||||||||
Additional
paid-in capital
|
$
|
17,898,075
|
$
|
(1,889,063
|
)
|
$
|
16,009,012
|
|||
Deficit
accumulated during the development stage
|
(15,253,784
|
)
|
1,889,063
|
(13,364,721
|
)
|
|||||
Total
Stockholders’ Equity
|
$
|
2,665,876
|
$
|
-
|
$
|
2,665,876
|
December
31, 2007
As
Previously Reported
|
Adjustments
|
December
31, 2007
As
Restated
|
||||||||
Additional
paid-in capital
|
$
|
17,749,788
|
$
|
(1,889,063
|
)
|
$
|
15,860,725
|
|||
Deficit
accumulated during the development stage
|
(14,394,741
|
)
|
1,889,063
|
(12,505,678
|
)
|
|||||
Total
Stockholders’ Equity
|
$
|
3,381,158
|
$
|
-
|
$
|
3,381,158
|
Carrying
Amount
|
||||||||||||||||
In
Consolidated
|
||||||||||||||||
Balance
Sheet
|
Fair
Value
|
Fair
Value Measurement Using
|
||||||||||||||
March
31, 2008
|
March
31, 2008
|
Level
1
|
Level
2
|
Level
3
|
||||||||||||
Money
Market Funds
|
$
|
61,656
|
$
|
61,656
|
$
|
61,656
|
$
|
-
|
$
|
-
|
March
31, 2008
|
December
31, 2007
|
||||||
(unaudited)
|
|||||||
Component
parts
|
$
|
1,216,738
|
$
|
1,266,612
|
|||
Work
in process
|
36,444
|
10,407
|
|||||
Finished
goods
|
324,903
|
378,340
|
|||||
Totals
|
$
|
1,578,085
|
$
|
1,655,359
|
March
31,
2008
|
December
31, 2007
|
||||||
(unaudited)
|
|||||||
Note
payable to City of Algona. See (a)
|
$
|
155,000
|
$
|
160,000
|
|||
Note
payable to Algona Area Economic Development Corporation. See (b)
|
146,124
|
146,124
|
|||||
Note
payable to Algona Area Economic Development Corporation. See
(c)
|
60,881
|
64,827
|
|||||
Notes
payable to Iowa Department of Economic Development. See (d)
|
400,000
|
400,000
|
|||||
Note
payable to finance company. See (e)
|
-
|
6,388
|
|||||
Note
payable to bank. See (f)
|
591,956
|
594,246
|
|||||
1,353,962
|
1,368,585
|
||||||
Less
amounts due within one year
|
43,337
|
30,350
|
|||||
Totals
|
$
|
1,310,625
|
$
|
1,338,235
|
2009
|
$
|
591,011
|
||
2010
|
169,562
|
|||
2011
|
200,330
|
|||
2012
|
148,800
|
|||
Thereafter
|
200,922
|
|||
Total
long-term debt
|
$
|
1,310,625
|
·
|
$67,650
of principal and interest will be forgiven if we certify that we
have
created 50 new full-time equivalent jobs by June 1, 2010, and continuously
retained those jobs in Algona, Iowa until June 1,
2015.
|
·
|
$67,650
of principal and interest will be forgiven if we certify that we
have
created and continuously retained 50 additional new full-time equivalent
jobs by June 1, 2015.
|
·
|
Balance
of $10,824 due on June 1, 2015, without interest if paid by that
date.
|
·
|
Payment
of a wage for the retained jobs that is equal to or greater than
the
average hourly wage for workers in Kossuth County, Iowa, as determined
annually by Iowa Workforce
Development.
|
2008
|
$
|
43,086
|
||
2009
|
57,448
|
|||
2010
|
19,889
|
|||
2011
|
11,586
|
|||
2012
|
635
|
|||
Total
minimum lease payments
|
132,644
|
|||
Less
amount representing interest
|
17,246
|
|||
Present
value of minimum lease payments
|
115,398
|
|||
Less
amounts due within one year
|
46,637
|
|||
Totals
|
$
|
68,761
|
For
the three months ending
|
Period
from Inception
|
|||||||||
March
31,
|
(May
19, 2003) to
|
|||||||||
2008
|
2007
|
March
31, 2008
|
||||||||
Risk-free
interest rate
|
3.6
|
%
|
4.7
|
%
|
4.2
|
%
|
||||
Expected
volatility
|
81.0
|
%
|
100.8
|
%
|
146.5
|
%
|
||||
Expected
life (in years)
|
4.0
|
5.5
|
7.4
|
|||||||
Dividend
yield
|
-
|
-
|
-
|
|||||||
Weighted-average
estimated fair value of options
|
||||||||||
granted
during the period
|
$
|
0.27
|
$
|
2.38
|
$
|
0.97
|
Options
Outstanding
|
|||||||||||||
Number
of Shares
|
Weighted-Average
Exercise Price
|
Weighted-Average
Remaining Contractual Term
(in
years)
|
Aggregate
Intrinsic Value
(1)
|
||||||||||
|
|||||||||||||
Balance
at December 31, 2007
|
884,916
|
$
|
1.16
|
||||||||||
Granted
|
50,000
|
$
|
.46
|
||||||||||
Balance
at March 31, 2008
|
934,916
|
$
|
1.12
|
5.02
|
$
|
0
|
|||||||
Vested
and exercisable as of
March 31, 2008
|
629,916
|
$
|
1.05
|
3.38
|
$
|
0
|
|||||||
Vested
and expected to vest as of
March 31, 2008
|
906,869
|
$
|
1.15
|
5.02
|
$
|
0
|
(1)
|
The
aggregate intrinsic value is calculated as approximately the difference
between the weighted-average exercise price of the underlying awards
and
our closing stock price of $0.40 on March 31, 2008, the last day
of
trading in March.
|
Unvested
Restricted Stock
|
|||||||
Number
of
Shares
|
Weighted-Average
Grant
Date
Fair
Value
|
||||||
Unvested
at December 31, 2007
|
92,000
|
$
|
1.00
|
||||
Vested
|
-
|
-
|
|||||
Unvested
at March 31, 2008
|
92,000
|
$
|
1.00
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
Exercise
Price
|
Options
Outstanding
|
Weighted-Average
Remaining Contractual Life
|
Weighted-Average
Exercise Price
|
Shares
Exercisable
|
Weighted-Average
Exercise Price
|
|||||||||||
$0.40
|
20,000
|
10.00
|
$
|
.40
|
10,000
|
$
|
.40
|
|||||||||
$0.50
|
30,000
|
2.88
|
$
|
.50
|
30,000
|
$
|
.50
|
|||||||||
$1.00
|
481,666
|
2.72
|
$
|
1.00
|
429,666
|
$
|
1.00
|
|||||||||
$1.34
|
393,250
|
7.62
|
$
|
1.34
|
160,250
|
$
|
1.34
|
|||||||||
$1.40
|
10,000
|
9.41
|
$
|
1.40
|
-
|
$
|
-
|
|||||||||
934,916
|
5.01
|
$
|
1.05
|
629,916
|
$
|
1.05
|
2008
|
2007
|
From
Inception
(May
19, 2003) to March 31, 2008
|
||||||||
Revenues
|
$
|
161,685
|
$
|
238,290
|
$
|
1,224,388
|
||||
Cost
of Goods Sold
|
138,463
|
202,664
|
2,022,270
|
|||||||
Gross
Profit (Loss)
|
23,222
|
35,626
|
(797,882
|
)
|
||||||
Operating
Expenses
|
846,235
|
1,767,304
|
12,346,682
|
|||||||
Loss
from Operations
|
(823,013
|
)
|
(1,731,678
|
)
|
(13,144,564
|
)
|
||||
Other
Expense
|
(36,030
|
)
|
(30,136
|
)
|
(220,157
|
)
|
||||
Net
Loss
|
$
|
(859,043
|
)
|
$
|
(1,761,814
|
)
|
$
|
(13,364,721
|
)
|
|
Series
A Preferred Stock Beneficial Conversion Feature Accreted as a
Dividend
|
-
|
$
|
(1,889,063
|
)
|
$
|
(1,889,063
|
)
|
|||
Net
Loss Available to Common Stockholders
|
$
|
(859,043
|
)
|
$
|
(3,650,877
|
)
|
$
|
(15,253,784
|
)
|
From
Inception
|
||||||||||
Three
months ended March 31,
|
(May
19, 2003) to
|
|||||||||
2008
|
2007
|
March
31, 2008
|
||||||||
Net
cash used in operating activities
|
$
|
(505,830
|
)
|
$
|
(1,303,078
|
)
|
$
|
(11,674,142
|
)
|
|
Net
cash used in investing activities
|
(1,297
|
)
|
(43,125
|
)
|
(3,092,633
|
)
|
||||
Net
cash provided by (used in) financing activities
|
(40,058
|
)
|
515,244
|
14,936,291
|
·
Community
Economic Betterment Account Forgivable Loan (“CEBA”)
|
$
|
250,000
|
||
·
Physical
Infrastructure Assistance Program Forgivable Loan (“PIAP”)
|
$
|
150,000
|
||
·
Enterprise
Zone (estimated value)
|
$
|
142,715
|
§
|
Funding
for training new employees through a supplemental new jobs withholding
credit equal to 3% of gross wages of the new jobs created;
|
§
|
A
refund of 100% of the sales, service and use taxes paid to contractors
and
subcontractors during the construction phase of the plant (excluding
local
option taxes);
|
§
|
A
6.5% research activities tax credit based on increasing research
activities within the State of Iowa;
|
§
|
An
investment tax credit equal to 10% of our capital investment. This
Iowa
tax credit may be carried forward for up to seven
years.
|
§
|
A
value-added property tax exemption. Our community has approved an
exemption from taxation on a portion of the property in which our
business
is located.
|
Exhibit
No.
|
Description
|
31.1
|
Certification
pursuant to Item 601(b) (31) of Regulation S-K, as adopted pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002, by Theodore G. Hollinger,
the company's Acting President and Chief Executive
Officer.
|
31.2
|
Certification
pursuant to Item 601(b) (31) of Regulation S-K, as adopted pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002, by Sandra Batt,
the
company's Chief Financial Officer.
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002, by Theodore G. Hollinger, the company's
Acting President and Chief Executive Officer.
|
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002, by Sandra Batt, the company's Chief
Financial Officer.
|
HYDROGEN
ENGINE CENTER, INC.
|
|||
Date:
July 22, 2008
|
By
|
/s/
Theodore
G. Hollinger
|
|
Theodore
G. Hollinger
|
|||
Acting
President and Chief Executive Officer
|
|||
(Principal
Executive Officer)
|
|||
Date:
July 22, 2008
|
By
|
/s/
Sandra
Batt
|
|
Sandra
Batt
|
|||
Chief
Financial Officer
|
|||
(Principal Financial
Officer)
|