x
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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o
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
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Nevada
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26-0287664
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|
(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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Large
accelerated
filer
o
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Accelerated
filer
o
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Non-accelerated
filer o
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Smaller
reporting
company x
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Page
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PART
I - FINANCIAL INFORMATION
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Item
1. Financial Statements
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1
|
Item
2. Management’s Discussion and Analysis or
Plan of Operation
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9
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Item
3. Quantitative and Qualitative Disclosures
About Market Risk
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16
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Item
4. Controls and Procedures
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16
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PART
II - OTHER INFORMATION
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|
Item
1. Legal Proceedings
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17
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Item
2. Unregistered Sales of Equity Securities
and Use of Proceeds
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17
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Item
3. Defaults Upon Senior
Securities
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17
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Item
4. Reserved
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17
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Item
5. Other Information
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17
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Item
6. Exhibits
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17
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SIGNATURES
|
18
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March
31,
2010
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December
31,
2009
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|||||||
ASSETS
|
(Unaudited)
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
& cash equivalents
|
$ | 223,388 | $ | 356,179 | ||||
Prepaid
expenses
|
24,288 | 32,867 | ||||||
Other
receivables
|
9,200 | - | ||||||
Total
Current Assets
|
256,876 | 389,046 | ||||||
PROPERTY
& EQUIPMENT
|
||||||||
Machinery
& equipment
|
1,372 | 1,372 | ||||||
Furniture
& fixtures
|
27,056 | 27,056 | ||||||
Computer
equipment
|
22,268 | 22,268 | ||||||
Leasehold
improvements
|
94,914 | 94,914 | ||||||
145,610 | 145,610 | |||||||
Less
accumulated depreciation
|
(80,394 | ) | (68,898 | ) | ||||
Net
Property & Equipment
|
65,216 | 76,712 | ||||||
OTHER
ASSETS
|
||||||||
Patent
|
45,636 | 45,636 | ||||||
Trademark
|
4,467 | 4,467 | ||||||
Security
deposit
|
9,650 | 9,650 | ||||||
Total
Other Assets
|
59,753 | 59,753 | ||||||
TOTAL
ASSETS
|
$ | 381,845 | $ | 525,511 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 14,065 | $ | 1,391 | ||||
Accrued
expenses
|
53,226 | 52,985 | ||||||
Credit
card payable
|
311 | 470 | ||||||
Other
payables
|
12,412 | 872 | ||||||
TOTAL
LIABILITIES
|
80,014 | 55,718 | ||||||
SHAREHOLDERS'
EQUITY
|
||||||||
Preferred
stock, $0.0001 par value;
|
||||||||
50,000
authorized preferred shares
|
- | - | ||||||
Common
stock, $0.0001 par value;
|
||||||||
500,000,000
authorized common shares
|
||||||||
161,841,878
and 159,321,232 shares issued and outstanding
|
16,185 | 15,933 | ||||||
Additional
paid in capital
|
7,757,660 | 7,160,260 | ||||||
Common
stock subscription payable
|
70,000 | 161,040 | ||||||
Deficit
accumulated during the development stage
|
(7,542,014 | ) | (6,867,440 | ) | ||||
TOTAL
SHAREHOLDERS' EQUITY
|
301,831 | 469,793 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 381,845 | $ | 525,511 |
From
Inception
|
||||||||||||
June
1, 2007
|
||||||||||||
Three
Months Ended
|
through
|
|||||||||||
March
31, 2010
|
March
31, 2009
|
March
31, 2010
|
||||||||||
REVENUE
|
$ | - | $ | - | $ | - | ||||||
Selling
& marketing expense
|
119,255 | 109,787 | 958,827 | |||||||||
Administrative
expense
|
337,622 | 358,293 | 3,064,617 | |||||||||
Research
& development
|
159,798 | 189,133 | 1,121,940 | |||||||||
Stock
compensation expense
|
46,431 | - | 2,257,737 | |||||||||
Depreciation
& amortization expense
|
11,496 | 13,943 | 80,394 | |||||||||
TOTAL
OPERATING EXPENSES
|
674,602 | 671,156 | 7,581,974 | |||||||||
LOSS
FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSE)
|
(674,602 | ) | (671,156 | ) | (7,581,974 | ) | ||||||
OTHER
INCOME/(EXPENSE)
|
||||||||||||
Interest
income
|
4 | 16 | 13,673 | |||||||||
Dividend
income
|
24 | 712 | 26,641 | |||||||||
Capital
gains
|
- | - | 107 | |||||||||
Penalties
|
- | (86 | ) | (86 | ) | |||||||
Interest
expense
|
- | - | (375 | ) | ||||||||
- | ||||||||||||
TOTAL
OTHER INCOME
|
28 | 642 | 39,960 | |||||||||
NET
LOSS
|
$ | (674,574 | ) | $ | (670,514 | ) | $ | (7,542,014 | ) | |||
BASIC
AND DILUTED LOSS PER SHARE
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
WEIGHTED-AVERAGE
COMMON SHARES OUTSTANDING
|
||||||||||||
BASIC
AND DILUTED
|
159,759,605 | 144,180,050 |
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
during
the
|
||||||||||||||||||||||
Common
stock
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Paid-in
|
Stock
|
Development
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|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Payable
|
Stage
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Total
|
|||||||||||||||||||
Balance
at December 31, 2009
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159,321,232 | $ | 15,933 | $ | 7,160,260 | $ | 161,040 | $ | (6,867,440 | ) | $ | 469,793 | ||||||||||||
Issuance
of common stock subscription payable in March 2010
|
||||||||||||||||||||||||
(732,000
shares issued at $0.22 per share) (Unaudited)
|
732,000 | 73 | 160,967 | (161,040 | ) | - | - | |||||||||||||||||
Issuance
of common stock issued in March 2010
|
||||||||||||||||||||||||
(1,788,646
shares issued at $0.22 per share) (Unaudited)
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1,788,646 | 179 | 393,304 | - | - | 393,483 | ||||||||||||||||||
Common
stock subscription payable (Unaudited)
|
- | - | - | 70,000 | - | 70,000 | ||||||||||||||||||
Stock
compensation expense (Unaudited)
|
- | - | 46,431 | - | - | 46,431 | ||||||||||||||||||
Stock
issuance cost (Unaudited)
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- | - | (3,302 | ) | - | - | (3,302 | ) | ||||||||||||||||
Net
loss for the three months ended March 31, 2010 (Unaudited)
|
- | - | - | - | (674,574 | ) | (674,574 | ) | ||||||||||||||||
Balance
at March 31, 2010 (Unaudited)
|
161,841,878 | $ | 16,185 | $ | 7,757,660 | $ | 70,000 | $ | (7,542,014 | ) | $ | 301,831 |
From
Inception
|
||||||||||||
June
1, 2007
|
||||||||||||
Three
Months Ended
|
through
|
|||||||||||
March
31, 2010
|
March
31, 2009
|
March
31, 2010
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (674,574 | ) | $ | (670,514 | ) | $ | (7,542,014 | ) | |||
Adjustment
to reconcile net loss to net cash
|
||||||||||||
used
in operating activities
|
||||||||||||
Depreciation
& amortization
|
11,496 | 13,943 | 80,394 | |||||||||
Contributed
capital by investor
|
- | - | 375 | |||||||||
Common
stock issued for services
|
- | - | 5,000 | |||||||||
Stock
compensation expense
|
46,431 | - | 2,257,737 | |||||||||
Changes
in Assets and Liabilities
|
||||||||||||
(Increase)
Decrease in:
|
||||||||||||
Prepaid
expenses
|
8,579 | (2,728 | ) | (24,288 | ) | |||||||
Other
receivables
|
(9,200 | ) | - | (9,200 | ) | |||||||
Other
assets
|
- | - | (9,650 | ) | ||||||||
Increase
(Decrease) in:
|
||||||||||||
Accounts
payable
|
12,674 | 3,688 | 14,065 | |||||||||
Accrued
expenses
|
241 | (13,275 | ) | 53,226 | ||||||||
Credit
card payable
|
(159 | ) | (2,167 | ) | 311 | |||||||
Other
payable
|
11,540 | (20,435 | ) | 12,412 | ||||||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(592,972 | ) | (691,488 | ) | (5,161,632 | ) | ||||||
CASH
FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||||||
Patent
and trademark expenditures
|
- | (5,789 | ) | (45,636 | ) | |||||||
Purchase
of fixed assets
|
- | (4,704 | ) | (145,610 | ) | |||||||
NET
CASH USED IN INVESTING ACTIVITIES
|
- | (10,493 | ) | (191,246 | ) | |||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from common stock subscription payable
|
70,000 | - | 1,035,240 | |||||||||
Proceeds
for issuance of common stock, net
|
390,181 | 338,300 | 4,541,026 | |||||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
460,181 | 338,300 | 5,576,266 | |||||||||
NET
INCREASE/(DECREASE) IN CASH
|
(132,791 | ) | (363,681 | ) | 223,388 | |||||||
CASH
& CASH EQUIVALENTS, BEGINNING OF PERIOD
|
356,179 | 580,055 | - | |||||||||
CASH
& CASH EQUIVALENTS, END OF PERIOD
|
$ | 223,388 | $ | 216,374 | $ | 223,388 | ||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||||||
Interest
paid
|
$ | - | $ | - | $ | - | ||||||
Taxes
paid
|
$ | 800 | $ | 800 | $ | 1,600 | ||||||
SUPPLEMENTAL
SCHEDULE OF NON-CASH TRANSACTIONS
|
||||||||||||
Stock
issued for marketing services
|
$ | - | $ | - | $ | 105,705 |
1.
|
Basis of
Presentation
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
|
Revenue
Recognition
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
Loss per Share
Calculations
|
|
Share
based payments applies to transactions in which an entity exchanges its
equity instruments for goods or services, and also applies to liabilities
an entity may incur for goods or services that are to follow a fair value
of those equity instruments. We will be required to follow a fair value
approach using an option-pricing model, such as the Black Scholes option
valuation model, at the date of a stock option grant. The deferred
compensation calculated under the fair value method would then be
amortized over the respective vesting period of the stock option. The
adoption of share based compensation has no material impact on our results
of operations.
|
3.
|
CAPITAL
STOCK
|
4.
|
STOCK
OPTIONS AND WARRANTS
|
4.
|
STOCK
OPTIONS AND WARRANTS (Continued)
|
3/31/2010
|
|
Risk
free interest rate
|
2.29%
|
Stock
volatility factor
|
1%
|
Weighted
average expected option life
|
5
years
|
Expected
dividend yield
|
None
|
|
A
summary of the Company’s stock option activity and related information
follows:
|
3/31/2010
|
||||||||
Weighted
|
||||||||
Number
|
average
|
|||||||
of
|
exercise
|
|||||||
Options
|
price
|
|||||||
Outstanding,
beginning of period
|
4,150,000 | $ | 0.31 | |||||
Granted
|
- | - | ||||||
Exercised
|
- | - | ||||||
Expired
|
- | - | ||||||
Outstanding,
end of period
|
4,150,000 | $ | 0.31 | |||||
Exercisable
at the end of period
|
540,625 | $ | 0.31 | |||||
Weighted
average fair value of
|
||||||||
options
granted during the period
|
$ | - |
3/31/2010
|
|
Risk
free interest rate
|
2.41%
- 2.5%
|
Stock
volatility factor
|
1%
|
Weighted
average expected option life
|
5
years
|
Expected
dividend yield
|
None
|
4.
|
STOCK
OPTIONS AND WARRANTS (Continued)
|
March
31, 2010
|
||||||||
Weighted
|
||||||||
average
|
||||||||
exercise
|
||||||||
Options
|
price
|
|||||||
Outstanding
-beginning of period
|
12,000,000 | $ | 0.31 | |||||
Granted
|
20,000 | 0.28 | ||||||
Exercised
|
- | - | ||||||
Forfeited
|
- | - | ||||||
Outstanding
- end of period
|
12,020,000 | $ | 0.29 |
5.
|
SUBSEQUENT
EVENT
|
|
As
of May 12, 2010, the Company received from investors through a private
placement $128,680 for purchase of 584,909 shares of common stock at a
price of $0.22 per share.
|
●
|
business
strategy;
|
|
●
|
financial
strategy;
|
|
●
|
intellectual
property;
|
|
●
|
production;
|
|
●
|
future
operating results; and
|
|
●
|
plans,
objectives, expectations and intentions contained in this report that are
not historical.
|
■
|
Original
Equipment Manufacturers (OEMs)
|
|
■
|
Country
and Regional Partners
|
|
■
|
Device
and Component Manufacturers
|
|
■
|
Service
and Maintenance Providers
|
|
■
|
Customized
Application Developers
|
1.
|
On
July 28, 2007, to protect the intellectual property rights for “Algae
Growth System for Oil Production”. The inventors listed on the patent
application are Nicholas Eckelberry and T. Riggs Eckelberry, the Company’s
founders. The Company is listed as the assignee. We have not received any
correspondence from the USPTO, with respect to this patent
application.
|
2.
|
On
May 23, 2008, to protect the intellectual property rights for “Apparatus
And Method For Optimizing Photosynthetic Growth In a Photo Bioreactor”.
The inventors listed on the patent application are Steven Shigematsu and
Nicholas Eckelberry. The Company is listed as the assignee. We have not
received any correspondence from the USPTO, with respect to this patent
application.
|
3.
|
On
May 30, 2008, to protect the intellectual property rights for “Modular
Portable Photobioreactor System”. The inventors listed on the patent
application are Steven Shigematsu and Nicholas Eckelberry. The Company is
listed as the assignee. We have not received any correspondence from the
USPTO, with respect to this patent
application.
|
4.
|
On
January 6, 2009, to protect the intellectual property rights for
“Apparatus And Method For Optimizing Photosynthetic Growth In A
Photobioreactor”. The inventor listed on the patent application is
Nicholas Eckelberry. The Company is listed as the assignee. We have not
received any correspondence from the USPTO, with respect to this patent
application.
|
5.
|
On
April 17, 2009, to protect the intellectual property rights for “Device
and Method for Separation, Cell Lysing and Flocculation of Algae From
Water”. The inventor listed on the patent application is Nicholas
Eckelberry. The Company is listed as the assignee. We have not received
any correspondence from the USPTO, with respect to this patent
application.
|
6.
|
On
July 13, 2009, a provisional filing to protect the intellectual property
rights for “Algae Growth Lighting and Control System”. The inventors
listed on the patent application are Scott Fraser, Vikram Pattarkine,
Ralph Anderson and Nicholas Eckelberry. The Company is listed as the
assignee. We have not received any correspondence from the USPTO, with
respect to this patent application.
|
7.
|
On
July 26, 2009, a provisional filing to protect the intellectual property
rights for “Procedure For Extraction Of Lipids From Algae Without Cell
Sacrifice”. The inventors listed on the patent application are Paul Reep
and Scott Fraser. The Company is listed as the assignee. We have not
received any correspondence from the USPTO, with respect to this patent
application.
|
8.
|
On
September 30, 2009, a provisional filing to protect the intellectual
property rights for “Methods and Apparatus for Growing Algae on a Solid
Surface”. The inventors listed on the patent application are and Scott
Fraser and Vikram Pattarkine. The Company is listed as the assignee. We
have not received any correspondence from the USPTO, with respect to this
patent application.
|
Exhibit No.
|
Title
of Document
|
Location
|
||
3.1
|
Articles
of Incorporation
|
(1)
|
||
3.3
|
By-laws
|
(2)
|
||
31.1
|
Certification
by Chief Executive Officer and Chief Financial Officer, required by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act.
|
Attached
|
||
32.1
|
|
Certification
by Chief Executive Officer and Chief Financial Officer, required by Rule
13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of
Chapter 63 of Title 18 of the United States Code.
|
|
Attached
|
(1)
|
Incorporated
by reference to the Company’s Registration Statement on Form SB-2 filed
with the Securities and Exchange Commission on March 24,
2008
|
(2)
|
Incorporated
by reference to the Company’s Registration Statement on Form SB-2 filed
with the Securities and Exchange Commission on December 11,
2007.
|
ORIGINOIL,
INC.
|
|
By:
|
/s/
T Riggs Eckelberry
|
T
Riggs Eckelberry
|
|
Chief
Executive Officer (Principal Executive Officer)
|
|
and Acting Chief Financial Officer (Principal Accounting and Financial Officer)
|
|
May
17, 2010
|