x
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QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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|
¨
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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
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¨
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Accelerated
filer
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¨
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Non-accelerated
filer
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¨
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Smaller
reporting company
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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
|
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
|
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
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18
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June 30, 2010
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December 31, 2009
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|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
& cash equivalents
|
$ | 106,837 | $ | 356,179 | ||||
Prepaid
expenses
|
124,786 | 32,867 | ||||||
Other
receivables
|
4,400 | - | ||||||
TOTAL
CURRENT ASSETS
|
236,023 | 389,046 | ||||||
PROPERTY
& EQUIPMENT
|
||||||||
Machinery
& equipment
|
1,372 | 1,372 | ||||||
Furniture
& fixtures
|
27,056 | 27,056 | ||||||
Computer
equipment
|
23,340 | 22,268 | ||||||
Leasehold
improvements
|
94,914 | 94,914 | ||||||
146,682 | 145,610 | |||||||
Less
accumulated depreciation
|
(95,883 | ) | (68,898 | ) | ||||
NET
PROPERTY & EQUIPMENT
|
50,799 | 76,712 | ||||||
OTHER
ASSETS
|
||||||||
Patent
|
59,833 | 45,636 | ||||||
Trademark
|
4,467 | 4,467 | ||||||
Security
deposit
|
9,650 | 9,650 | ||||||
TOTAL
OTHER ASSETS
|
73,950 | 59,753 | ||||||
TOTAL
ASSETS
|
$ | 360,772 | $ | 525,511 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 17,246 | $ | 1,391 | ||||
Accrued
expenses
|
43,229 | 52,985 | ||||||
Credit
card payable
|
1,135 | 470 | ||||||
Other
payables
|
12,187 | 872 | ||||||
TOTAL
LIABILITIES
|
73,797 | 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
|
7,928,069 | 7,160,260 | ||||||
Common
stock subscription payable
|
700,036 | 161,040 | ||||||
Deficit
accumulated during the development stage
|
(8,357,315 | ) | (6,867,440 | ) | ||||
TOTAL
SHAREHOLDERS' EQUITY
|
286,975 | 469,793 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 360,772 | $ | 525,511 |
From
Inception
|
||||||||||||||||||||
June
1, 2007
|
||||||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
through
|
||||||||||||||||||
June
30, 2010
|
June
30, 2009
|
June
30, 2010
|
June
30, 2009
|
June
30, 2010
|
||||||||||||||||
REVENUE
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
General
& Administrative expense
|
613,737 | 669,956 | 1,117,045 | 1,195,951 | 6,894,917 | |||||||||||||||
Research
& development
|
186,085 | 90,695 | 345,884 | 221,912 | 1,406,484 | |||||||||||||||
Depreciation
& amortization expense
|
15,489 | 13,943 | 26,984 | 27,886 | 95,883 | |||||||||||||||
TOTAL
OPERATING EXPENSES
|
815,311 | 774,594 | 1,489,913 | 1,445,749 | 8,397,284 | |||||||||||||||
LOSS
FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSE)
|
(815,311 | ) | (774,594 | ) | (1,489,913 | ) | (1,445,749 | ) | (8,397,284 | ) | ||||||||||
OTHER
INCOME/(EXPENSE)
|
||||||||||||||||||||
Interest
income
|
2 | 5 | 6 | 22 | 13,675 | |||||||||||||||
Dividend
income
|
7 | 58 | 32 | 769 | 26,648 | |||||||||||||||
Capital
gains
|
- | - | - | - | 107 | |||||||||||||||
Penalties
|
- | - | - | (86 | ) | (86 | ) | |||||||||||||
Interest
expense
|
- | - | - | - | (375 | ) | ||||||||||||||
- | - | |||||||||||||||||||
TOTAL
OTHER INCOME
|
9 | 63 | 38 | 705 | 39,969 | |||||||||||||||
NET
LOSS
|
$ | (815,302 | ) | $ | (774,531 | ) | $ | (1,489,875 | ) | $ | (1,445,044 | ) | $ | (8,357,315 | ) | |||||
BASIC
AND DILUTED LOSS PER SHARE
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||
WEIGHTED-AVERAGE
COMMON SHARES OUTSTANDING
|
||||||||||||||||||||
BASIC
AND DILUTED
|
161,841,878 | 147,210,610 | 160,795,052 | 145,703,702 |
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
during
the
|
||||||||||||||||||||||
Common
stock
|
Paid-in
|
Stock
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Payable
|
Stage
|
Total
|
|||||||||||||||||||
Balance
at December 31, 2009
|
159,321,232 | $ | 15,933 | $ | 7,160,260 | $ | 161,040 | $ | (6,867,440 | ) | $ | 469,793 | ||||||||||||
Issuance
of common stock for 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 for cash in March 2010 (1,788,646 shares issued
at $0.22 per share) (Unaudited)
|
1,788,646 | 179 | 393,304 | - | - | 393,483 | ||||||||||||||||||
Cash
received for common stock subscription payable (Unaudited)
|
- | - | - | 700,036 | - | 700,036 | ||||||||||||||||||
Stock
compensation expense (Unaudited)
|
- | - | 216,840 | - | - | 216,840 | ||||||||||||||||||
Stock
issuance cost (Unaudited)
|
- | - | (3,302 | ) | - | - | (3,302 | ) | ||||||||||||||||
Net
loss for the six months ended June 30, 2010 (Unaudited)
|
- | - | - | - | (1,489,875 | ) | (1,489,875 | ) | ||||||||||||||||
Balance
at June 30, 2010 (Unaudited)
|
161,841,878 | $ | 16,185 | $ | 7,928,069 | $ | 700,036 | $ | (8,357,315 | ) | $ | 286,975 |
From
Inception
|
||||||||||||
June
1, 2007
|
||||||||||||
Six
Months Ended
|
through
|
|||||||||||
June 30, 2010
|
June 30, 2009
|
June 30, 2010
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (1,489,875 | ) | $ | (1,445,044 | ) | $ | (8,357,315 | ) | |||
Adjustment
to reconcile net loss to net cash
|
||||||||||||
used
in operating activities
|
||||||||||||
Depreciation
& amortization
|
26,984 | 27,886 | 95,883 | |||||||||
Contributed
capital by investor
|
- | - | 375 | |||||||||
Common
stock issued for services
|
- | - | 5,000 | |||||||||
Stock
compensation expense
|
216,840 | - | 2,428,146 | |||||||||
Changes
in Assets and Liabilities
|
||||||||||||
(Increase)
Decrease in:
|
||||||||||||
Prepaid
expenses
|
(91,919 | ) | 9,043 | (124,786 | ) | |||||||
Other
receivables
|
(4,400 | ) | - | (4,400 | ) | |||||||
Other
assets
|
- | - | (9,650 | ) | ||||||||
Increase
(Decrease) in:
|
||||||||||||
Accounts
payable
|
15,855 | (14,385 | ) | 17,246 | ||||||||
Accrued
expenses
|
(9,756 | ) | 2,117 | 43,229 | ||||||||
Credit
card payable
|
665 | (2,304 | ) | 1,135 | ||||||||
Other
payable
|
11,316 | (17,405 | ) | 12,187 | ||||||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(1,324,290 | ) | (1,440,092 | ) | (5,892,950 | ) | ||||||
CASH
FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||||||
Patent
and trademark expenditures
|
(14,197 | ) | (5,789 | ) | (59,833 | ) | ||||||
Purchase
of fixed assets
|
(1,072 | ) | (4,704 | ) | (146,682 | ) | ||||||
NET
CASH USED IN INVESTING ACTIVITIES
|
(15,269 | ) | (10,493 | ) | (206,515 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from common stock subscription payable
|
700,036 | 1,151,350 | 1,665,276 | |||||||||
Proceeds
for issuance of common stock, net
|
390,181 | 100,000 | 4,541,026 | |||||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
1,090,217 | 1,251,350 | 6,206,302 | |||||||||
NET
INCREASE/(DECREASE) IN CASH
|
(249,342 | ) | (199,235 | ) | 106,837 | |||||||
CASH
& CASH EQUIVALENTS, BEGINNING OF PERIOD
|
356,179 | 580,055 | - | |||||||||
CASH
& CASH EQUIVALENTS, END OF PERIOD
|
$ | 106,837 | $ | 380,820 | $ | 106,837 | ||||||
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
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
3.
|
CAPITAL
STOCK
|
4.
|
STOCK
OPTIONS AND WARRANTS
|
6/30/2010
|
||||
Risk
free interest rate
|
1.98%-2.29 | % | ||
Stock
volatility factor
|
1 | % | ||
Weighted
average expected option life
|
5
years
|
|||
Expected
dividend yield
|
None
|
6/30/2010
|
||||||||
Weighted
|
||||||||
Number
|
average
|
|||||||
of
|
exercise
|
|||||||
Options
|
price
|
|||||||
Outstanding,
beginning of period
|
4,150,000 | $ | 0.31 | |||||
Granted
|
2,850,000 | 0.23 | ||||||
Exercised
|
- | - | ||||||
Expired
|
(360,000 | ) | - | |||||
Outstanding,
end of period
|
6,640,000 | $ | 0.30 | |||||
Exercisable
at the end of period
|
891,874 | $ | 0.28 | |||||
Weighted
average fair value of options granted during the period
|
$ | - |
6/30/2010
|
||||
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)
|
June 30, 2010
|
||||||||
Weighted
|
||||||||
average
|
||||||||
exercise
|
||||||||
Options
|
price
|
|||||||
Outstanding
-beginning of period
|
12,000,000 | $ | 0.31 | |||||
Granted
|
1,020,000 | 0.24 | ||||||
Exercised
|
- | - | ||||||
Forfeited
|
- | - | ||||||
Outstanding
- end of period
|
13,020,000 | $ | 0.27 |
5.
|
SUBSEQUENT
EVENTS
|
●
|
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 received an
initial determination from the USPTO that this filing is comprised of
multiple inventions.
|
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 are still
awaiting examination 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 are still awaiting examination 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 are still
awaiting examination 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 are still awaiting
examination from the USPTO, with respect to this patent
application.
|
6.
|
On
August 13, 2010, 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 are still awaiting examination from the USPTO, with respect
to this patent application.
|
7.
|
On
August 13, 2010, 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 Michael Green. The Company is listed as the assignee. We are still
awaiting examination 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 Scott Fraser
and Vikram Pattarkine. The Company is listed as the assignee. We are still
awaiting examination from the USPTO, with respect to this patent
application.
|
9.
|
On
April 28, 2010, a provisional filing to protect the intellectual property
rights for “Multi-plane Growth Apparatus and Method”. The inventor listed
on the patent application is Christopher Beaven. The Company is listed as
the assignee. We are still awaiting examination from the USPTO, with
respect to this patent application.
|
10.
|
On
June 18, 2010, a provisional filing to protect the intellectual property
rights for “Bio Energy Reactor”. The inventor listed on the patent
application is Michael Green. The Company is listed as the assignee. We
are still awaiting examination 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)
|
|
August
13, 2010
|