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 October 6, 2008
|
|
Common
|
30,102,849
|
.
|
Page
|
|
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Condensed
Consolidated Financial Statements
|
|
|
||
Condensed
Consolidated Balance Sheets as of September 30, 2008 (unaudited)
and
December 31, 2007
|
3
|
|
Condensed
Consolidated Statements of Operations for the Nine Months and Three
Months Ended September 30, 2008 and 2007 and the period from inception
(May
19, 2003) through September 30, 2008 (unaudited)
|
5
|
|
Condensed
Consolidated Statements of Cash Flows for the Nine Months and Three
Months Ended September 30, 2008 and 2007 and the period from inception
(May
19, 2003) through September 30, 2008 (unaudited)
|
6
|
|
Notes
to Condensed Consolidated Financial Statements (unaudited)
|
8
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and
Results of Operations
|
20
|
Item
4T.
|
Controls
and Procedures
|
31
|
PART
II.
|
OTHER
INFORMATION
|
|
Item
1.
|
Legal
Proceedings
|
32
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
32
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
33
|
Notes
About Forward-looking Statements
|
33
|
|
SIGNATURES
|
34
|
September
30,
|
December
31,
|
||||||
ASSETS
|
2008
|
|
2007
|
||||
(Unaudited)
|
|||||||
Current
Assets
|
|||||||
Cash
and cash equivalents
|
$
|
50,492
|
$
|
713,289
|
|||
Restricted
cash
|
-
|
115,157
|
|||||
Accounts
receivable
|
204,082
|
134,237
|
|||||
Inventories
|
1,062,278
|
1,655,359
|
|||||
Prepaid
expenses
|
279,606
|
89,901
|
|||||
Total
current assets
|
1,596,458
|
2,707,943
|
|||||
Property,
Plant and Equipment
|
|||||||
Building
|
2,271,209
|
2,271,209
|
|||||
Equipment
|
900,194
|
908,999
|
|||||
Land
and improvements
|
472,504
|
472,504
|
|||||
3,643,907
|
3,652,712
|
||||||
Less
accumulated depreciation
|
557,177
|
375,178
|
|||||
Net
property and equipment
|
3,086,730
|
3,277,534
|
|||||
Total
Assets
|
$
|
4,683,188
|
$
|
5,985,477
|
September
30,
|
|
December
31,
|
|||||
LIABILITIES
AND EQUITY
|
2008
|
2007
|
|||||
(Unaudited)
|
|||||||
Current
Liabilities
|
|||||||
Notes
payable, banks
|
$
|
1,378,081
|
$
|
594,677
|
|||
Current
portion long-term debt
|
24,271
|
30,350
|
|||||
Current
installments of obligation under capital lease
|
49,549
|
45,247
|
|||||
Accounts
payable
|
285,527
|
146,585
|
|||||
Accrued
expenses
|
315,025
|
207,328
|
|||||
Accrued
interest
|
166,273
|
129,965
|
|||||
Deferred
revenue
|
87,306
|
-
|
|||||
Unearned
grants
|
13,837
|
30,977
|
|||||
Total
current liabilities
|
2,319,869
|
1,185,129
|
|||||
Long-term
debt, net of current maturities
|
725,737
|
1,338,235
|
|||||
Obligation
under capital lease, excluding current
installments
|
43,236
|
80,955
|
|||||
768,973
|
1,419,190
|
||||||
Total
liabilities
|
3,088,842
|
2,604,319
|
|||||
Commitments
and Contingencies
|
|||||||
Stockholders'
Equity
|
|||||||
Preferred
stock - Series B, $0.001 par value; 5,000,000 shares
authorized,
|
|||||||
-0-
and 930,000 shares issued and outstanding
|
-
|
1,933
|
|||||
Common
stock, $0.001 par value; 100,000,000 shares authorized,
|
|||||||
30,102,849
and 27,590,164 shares issued and outstanding
|
30,103
|
27,590
|
|||||
Additional
paid-in capital
|
16,347,601
|
15,860,725
|
|||||
Accumulated
other comprehensive loss - foreign currency
|
(7,168
|
)
|
(3,412
|
)
|
|||
Deficit
accumulated during the development stage
|
(14,776,190
|
)
|
(12,505,678
|
)
|
|||
Total
stockholders' equity
|
1,594,346
|
3,381,158
|
|||||
Total
Liabilities and Stockholders’ Equity
|
$
|
4,683,188
|
$
|
5,985,477
|
|
From
Inception
|
|||||||||||||||
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
(May
19, 2003) to
|
||||||||||||||
2008
|
2007
|
|
2008
|
2007
|
September
30, 2008
|
|||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||
Sales
|
$
|
352,571
|
$
|
86,047
|
$
|
874,028
|
$
|
527,720
|
$
|
1,936,731
|
||||||
Cost
of Goods Sold
|
||||||||||||||||
Material,
labor, and overhead
|
326,968
|
74,299
|
809,195
|
447,143
|
1,730,979
|
|||||||||||
Inventory
markdown
|
105,788
|
239,598
|
15,215
|
220,853
|
977,238
|
|||||||||||
432,756
|
313,897
|
824,410
|
667,996
|
2,708,217
|
||||||||||||
Gross
Profit (Loss)
|
(80,185
|
)
|
(227,850
|
)
|
49,618
|
(140,276
|
)
|
(771,486
|
)
|
|||||||
Operating
Expenses
|
||||||||||||||||
Sales
and marketing
|
24,829
|
64,488
|
159,385
|
231,236
|
1,360,421
|
|||||||||||
General
and administrative
|
378,607
|
610,243
|
1,446,642
|
2,167,029
|
7,918,051
|
|||||||||||
Research
and development
|
208,004
|
361,089
|
614,678
|
1,109,662
|
3,865,181
|
|||||||||||
Vendor
settlement
|
-
|
-
|
-
|
448,011
|
577,500
|
|||||||||||
611,440
|
1,035,820
|
2,220,705
|
3,955,938
|
13,721,153
|
||||||||||||
Operating
Loss
|
(691,625
|
)
|
(1,263,670
|
)
|
(2,171,087
|
)
|
(4,096,214
|
)
|
(14,492,639
|
)
|
||||||
Other
Income (Expense)
|
||||||||||||||||
Interest
income
|
107
|
24,935
|
6,749
|
60,681
|
170,802
|
|||||||||||
Interest
expense
|
(33,549
|
)
|
(46,653
|
)
|
(106,174
|
)
|
(132,892
|
)
|
(447,619
|
)
|
||||||
Loss
on disposals of assets
|
-
|
(1,027
|
)
|
-
|
(1,027
|
)
|
(6,734
|
)
|
||||||||
(33,442
|
)
|
(22,745
|
)
|
(99,425
|
)
|
(73,238
|
)
|
(283,551
|
)
|
|||||||
Net
Loss
|
$
|
(725,067
|
)
|
$
|
(1,286,415
|
)
|
$
|
(2,270,512
|
)
|
$
|
(4,169,452
|
)
|
$
|
(14,776,190
|
)
|
|
Series
A Preferred stock beneficial conversion
|
||||||||||||||||
feature
accreted as a dividend
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(1,889,063
|
)
|
$
|
(1,889,063
|
)
|
||||
Net
Loss Attributable To
|
||||||||||||||||
Common
Stockholders
|
$
|
(725,067
|
)
|
$
|
(1,286,415
|
)
|
$
|
(2,270,512
|
)
|
$
|
(6,058,515
|
)
|
$
|
(16,665,253
|
)
|
|
Weighted
-average shares outstanding
|
29,834,325
|
25,773,966
|
28,522,401
|
25,749,887
|
||||||||||||
Basic
and diuluted net loss per share
|
(0.02
|
)
|
(0.05
|
)
|
(0.08
|
)
|
(0.24
|
)
|
From
Inception
|
||||||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
(May
19, 2003) to
|
||||||||||||||
2008
|
|
2007
|
|
2008
|
2007
|
September
30, 2008
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||
Operating
Activities
|
||||||||||||||||
Net
loss
|
$
|
(725,067
|
)
|
$
|
(1,286,415
|
)
|
$
|
(2,270,512
|
)
|
$
|
(4,169,452
|
)
|
$
|
(14,776,190
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operations:
|
||||||||||||||||
Depreciation
|
62,586
|
50,207
|
191,607
|
168,714
|
618,450
|
|||||||||||
Compensation
to directors and employees of stock options and restricted
stock
|
71,672
|
153,759
|
279,718
|
478,795
|
1,654,137
|
|||||||||||
Compensation
to consultants of stock options
|
2,425
|
2,463
|
15,132
|
7,388
|
201,942
|
|||||||||||
Warrants
issued in vendor dispute
|
-
|
-
|
-
|
577,500
|
577,500
|
|||||||||||
Loss
on sale of assets
|
-
|
-
|
-
|
-
|
6,734
|
|||||||||||
Change
in assets and liabilities:
|
||||||||||||||||
Accounts
receivable
|
22,785
|
33,743
|
(44,845
|
)
|
102,200
|
(179,082
|
)
|
|||||||||
Inventories
|
326,027
|
(16,316
|
)
|
593,081
|
(349,658
|
)
|
(1,041,213
|
)
|
||||||||
Prepaid
expenses
|
(16,603
|
)
|
7,356
|
(29,705
|
)
|
(26,312
|
)
|
(141,063
|
)
|
|||||||
Accounts
payable
|
25,294
|
274,082
|
138,139
|
(54,196
|
)
|
368,809
|
||||||||||
Accrued
expenses
|
35,383
|
(67,734
|
)
|
107,697
|
44,762
|
361,263
|
||||||||||
Accrued
interest
|
11,200
|
12,688
|
36,308
|
18,409
|
166,273
|
|||||||||||
Deferred
revenue
|
87,306
|
-
|
87,306
|
-
|
87,306
|
|||||||||||
Unearned
grants
|
(4,936
|
)
|
(8,536
|
)
|
(17,140
|
)
|
(26,328
|
)
|
13,837
|
|||||||
Net
cash used in operating activities
|
(101,928
|
)
|
(844,703
|
)
|
(913,214
|
)
|
(3,228,178
|
)
|
(12,081,297
|
)
|
||||||
Investing
Activities
|
||||||||||||||||
Withdrawal/(Deposit)
of restricted cash
|
-
|
(4,021
|
)
|
115,157
|
(11,846
|
)
|
-
|
|||||||||
Proceeds
from sale of assets
|
-
|
36,000
|
-
|
|
36,000
|
36,500
|
||||||||||
Purchases
of property, plant, and equipment
|
-
|
(65,815
|
)
|
-
|
(167,854
|
)
|
(3,012,908
|
)
|
||||||||
Net
cash provided by (used in) investing activities
|
-
|
(33,836
|
)
|
115,157
|
(143,700
|
)
|
(2,976,408
|
)
|
||||||||
Financing
Activities
|
||||||||||||||||
Proceeds
from note payable, bank
|
54,000
|
-
|
250,000
|
250,000
|
2,089,420
|
|||||||||||
Payments
on note payable, bank
|
(23,355
|
)
|
(3,560
|
)
|
(55,441
|
)
|
(8,818
|
)
|
(968,585
|
)
|
||||||
Proceeds
from long-term debt
|
-
|
-
|
-
|
-
|
1,172,052
|
|||||||||||
Payments
on long-term debt
|
(17,489
|
)
|
(22,471
|
)
|
(63,149
|
)
|
(56,109
|
)
|
(207,044
|
)
|
||||||
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
|
-
|
-
|
-
|
3,595,095
|
3,595,095
|
|||||||||||
Issuance
of common stock in private placements, net of expenses
|
-
|
-
|
-
|
-
|
6,639,008
|
|||||||||||
Issuance
of common stock from registration, net of expenses
|
7,606
|
-
|
7,606
|
-
|
7,606
|
|||||||||||
Net
cash provided by (used in) financing activities
|
20,762
|
(26,031
|
)
|
139,016
|
3,780,168
|
15,115,365
|
||||||||||
Effect
of Exchange Rates on Cash and Cash Equivalents
|
(682
|
)
|
13,376
|
(3,756
|
)
|
6,231
|
(7,168
|
)
|
||||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(81,848
|
)
|
(891,194
|
)
|
(662,797
|
)
|
414,521
|
50,492
|
||||||||
Cash
and Cash Equivalents – Beginning of Period
|
132,340
|
2,454,922
|
713,289
|
1,149,207
|
-
|
|||||||||||
Cash
and Cash Equivalents – End of Period
|
$
|
50,492
|
$
|
1,563,728
|
$
|
50,492
|
$
|
1,563,728
|
$
|
50,492
|
From
Inception
|
||||||||||||||||
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
(May
19, 2003) to
|
||||||||||||||
2008
|
|
2007
|
|
2008
|
|
2007
|
|
September
30, 2008
|
||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||
Supplemental
Cash Flow Information
|
||||||||||||||||
Interest
paid
|
$
|
22,348
|
$
|
33,961
|
$
|
69,865
|
$
|
114,331
|
$
|
281,155
|
||||||
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
|
||||||
Issuance
of warrants for inventory
|
$
|
-
|
$
|
21,065
|
$
|
-
|
$
|
21,065
|
$
|
21,065
|
||||||
Conversion
of Preferred Stock for Series A
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,511
|
||||||
Series
A Preferred stock beneficial conversion feature
|
||||||||||||||||
accreted
as a dividend
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,889,063
|
$
|
1,889,063
|
||||||
Conversion
of Preferred Stock for Series B
|
$
|
-
|
$
|
-
|
$
|
1,933
|
$
|
-
|
$
|
1,933
|
||||||
Issuance
of common stock for financing commitment fee
|
$
|
-
|
$
|
-
|
$
|
160,000
|
$
|
-
|
$
|
160,000
|
Period
from Inception
|
||||
(May
19, 2003) to
|
||||
September
30, 2008
|
||||
Net
loss attributable to common shareholders, as reported
|
$
|
(16,665,253
|
)
|
|
Add:
options and restricted stock-based employee compensation
|
||||
expense
included in reported net loss attributable to common
shareholders
|
1,654,138
|
|||
Deduct:
options and restricted stock-based employee compensation
|
||||
expense
determined under fair value based method
|
(1,839,940
|
)
|
||
Pro
forma net loss attributable to common shareholders
|
$
|
(16,851,055
|
)
|
September
30, 2008
|
December
31, 2007
|
||||||
(unaudited)
|
|||||||
Component
parts
|
$
|
852,008
|
$
|
1,266,612
|
|||
Work
in process
|
27,070
|
10,407
|
|||||
Finished
goods
|
183,200
|
378,340
|
|||||
Totals
|
$
|
1,062,278
|
$
|
1,655,359
|
September
30, 2008
|
December
31, 2007
|
||||||
(unaudited)
|
|||||||
Note
payable to City of Algona. See (a)
|
$
|
145,000
|
$
|
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)
|
58,884
|
61,827
|
|||||
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)
|
-
|
594,246
|
|||||
750,008
|
1,368,585
|
||||||
Less
amounts due within one year
|
24,271
|
30,350
|
|||||
Totals
|
$
|
725,737
|
$
|
1,338,235
|
2009
|
$
|
6,123
|
||
2010
|
169,562
|
|||
2011
|
200,330
|
|||
2012
|
148,800
|
|||
Thereafter
|
200,922
|
|||
Total
long-term debt
|
$
|
725,737
|
· |
$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.
|
At
September 30, 2008 we have created 10 jobs to meet the above job
creation
requirement.
|
(f)
On March 27, 2008, we renewed a note with a bank for $591,956. The
balance
of this note on September 30, 2008 was $583,221 and at September
30, 2008
was included in notes payable, bank (Note 4). This note matures on
April
1, 2009, and carries a variable interest rate equal to the Wall Street
Journal U.S. Prime Rate. At September 30, 2008, the interest rate
on the
note was 5% and requires monthly interest and principal payments
of
$4,340. The loan is secured by real estate. The entire remaining
balance
at September 30, 2008 is due within one year and considered current.
|
2008
|
$
|
14,362
|
||
2009
|
57,448
|
|||
2010
|
19,889
|
|||
2011
|
11,586
|
|||
2012
|
635
|
|||
Total
minimum lease payments
|
103,920
|
|||
Less
amount representing interest
|
11,135
|
|||
Present
value of minimum lease payments
|
92,785
|
|||
Less
amounts due within one year
|
49,549
|
|||
Totals
|
$
|
43,236
|
Period
from Inception
|
||||||||||||||||
For
the three months ending September 30,
|
For
the nine months ending
September
30,
|
(May
19, 2003) to
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
September
30, 2008
|
||||||||||||
Risk-free
interest rate
|
-
|
%
|
4.7
|
%
|
3.6
|
%
|
4.7
|
%
|
4.2
|
%
|
||||||
Expected
volatility
|
-
|
%
|
96.4
|
%
|
81.0
|
%
|
96.4
|
%
|
146.5
|
%
|
||||||
Expected
life (in years)
|
-
|
5.5
|
4.0
|
5.5
|
7.4
|
|||||||||||
Dividend
yield
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Weighted-average
estimated fair value of options granted during the period
|
$
|
-
|
$
|
.99
|
$
|
.27
|
$
|
.99
|
$
|
.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
|
||||||||||
Forfeited
|
(98,500
|
)
|
$
|
1.33
|
|||||||||
Balance
at September 30, 2008
|
836,416
|
$
|
1.09
|
3.56
|
$
|
-
|
|||||||
Vested
and exercisable as of
September 30, 2008
|
719,916
|
$
|
1.08
|
2.90
|
$
|
-
|
|||||||
Vested
and expected to vest as of
September 30, 2008
|
811,324
|
$
|
1.09
|
3.45
|
$
|
-
|
(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 $0.23 on September 30, 2008, the last
day of
trading in September.
|
Unvested
Restricted Stock
|
|||||||
Number
of
Shares
|
Weighted-Average
Grant
Date
Fair
Value
|
||||||
Unvested
at December 31, 2007
|
92,000
|
$
|
1.00
|
||||
Vested
|
(46,000
|
)
|
$
|
1.00
|
|||
Unvested
at September 30, 2008
|
46,000
|
$
|
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
|
9.50
|
$
|
.40
|
10,000
|
$
|
.40
|
|||||||||
$0.50
|
30,000
|
2.38
|
$
|
.50
|
30,000
|
$
|
.50
|
|||||||||
$1.00
|
481,666
|
2.22
|
$
|
1.00
|
455,666
|
$
|
1.00
|
|||||||||
$1.34
|
304,750
|
5.39
|
$
|
1.34
|
224,250
|
$
|
1.34
|
|||||||||
836,416
|
3.56
|
$
|
1.09
|
719,916
|
$
|
1.08
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
From
Inception
(May
19, 2003) to September
30,
2008
|
||||||||||||||
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|||||||||
Revenues
|
$
|
352,571
|
$
|
86,047
|
$
|
874,028
|
$
|
527,720
|
$
|
1,936,731
|
||||||
Cost
of Goods Sold
|
432,756
|
313,897
|
824,410
|
667,996
|
2,708,217
|
|||||||||||
Gross
Profit (Loss)
|
(80,185
|
)
|
(227,850
|
)
|
49,618
|
(140,276
|
)
|
(771,486
|
)
|
|||||||
Operating
Expenses
|
611,440
|
1,035,820
|
2,220,705
|
3,955,938
|
13,721,153
|
|||||||||||
Loss
from Operations
|
(691,625
|
)
|
(1,263,670
|
)
|
(2,171,087
|
)
|
(4,096,214
|
)
|
(14,492,639
|
)
|
||||||
Other
Expense
|
(33,442
|
)
|
(22,745
|
)
|
(99,425
|
)
|
(73,238
|
)
|
(283,551
|
)
|
||||||
Net
Loss
|
$
|
(725,067
|
)
|
$
|
(1,286,415
|
)
|
$
|
(2,270,512
|
)
|
$
|
(4,169,452
|
)
|
$
|
(14,776,190
|
)
|
|
Series
A Preferred Stock Beneficial Conversion Feature Accreted as a
Dividend
|
-
|
-
|
-
|
$
|
(1,889,063
|
)
|
$
|
(1,889,063
|
)
|
|||||||
Net
Loss Available to Common Stockholders
|
$
|
(725,067
|
)
|
$
|
(1,286,415
|
)
|
$
|
(2,270,512
|
)
|
$
|
(6,058,515
|
)
|
$
|
(16,665,253
|
)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
From
Inception
(May
19, 2003)
to
September
30,
2008
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
cash used in operating
activities
|
$
|
(101,928
|
)
|
$
|
(844,703
|
)
|
$
|
(913,214
|
)
|
$
|
(3,228,178
|
)
|
$
|
(12,081,297
|
)
|
|
Net
cash provided by (used
in) investing activities
|
-
|
(33,836
|
)
|
115,157
|
(143,700
|
)
|
(2,976,408
|
)
|
||||||||
Net
cash provided by (used
in) financing activities
|
20,762
|
(26,031
|
)
|
139,016
|
3,780,168
|
15,115,365
|
· 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.
|
Advance
Notice Date
|
Amount
Requested
|
Amount
Received
|
Shares
Issued
|
Purchase
Price of Shares Issued
|
|||||||||
August
11, 2008
|
$
|
10,000
|
$
|
8,131
|
27,093
|
$
|
.3001
|
||||||
September
3, 2008
|
15,000
|
6,000
|
21,444
|
$
|
.2798
|
||||||||
September
15, 2008
|
20,000
|
8,000
|
29,155
|
$
|
.2744
|
||||||||
September
22, 2008
|
25,000
|
25,000
|
115,580
|
$
|
.2163
|
||||||||
October
2, 2008
|
25,000
|
10,000
|
54,705
|
$
|
.1828
|
||||||||
Total
|
$
|
95,000
|
$
|
57,131
|
247,977
|
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 (Principal
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 (Principal 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 (Principal 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 (Principal Financial
Officer).
|
HYDROGEN
ENGINE CENTER, INC.
|
||
|
|
|
Date: November 14, 2008 | By | /s/ THEODORE G. HOLLINGER |
Theodore G. Hollinger |
||
Acting
President and Chief Executive Officer
(Principal
Executive Officer)
|
Date: November 14, 2008 | By | /s/ SANDRA BATT |
Sandra
Batt
Chief
Financial Officer
(Principal
Financial Officer)
|