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 SECURITIES EXCHANGE ACT OF 1934
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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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3 | |||
15 | |||
20 | |||
20 | |||
22 | |||
22 | |||
22 | |||
22 | |||
22 | |||
22 | |||
22 | |||
22 | |||
23 |
Three Months Ended
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Six Months Ended
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|||||||||||||||
June 30, 2014
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June 30, 2013
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June 30, 2014
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June 30, 2013
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|||||||||||||
Sales
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$ | - | $ | 100,000 | $ | 159,410 | $ | 100,000 | ||||||||
Cost of Goods Sold
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- | 30,644 | 105,970 | 30,644 | ||||||||||||
Gross Profit
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- | 69,356 | 53,440 | 69,356 | ||||||||||||
Operating Expenses
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||||||||||||||||
Selling and general and administrative expenses
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2,435,225 | 936,834 | 3,701,076 | 1,660,661 | ||||||||||||
Research and development
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232,590 | 224,576 | 479,437 | 437,351 | ||||||||||||
Depreciation and amortization expense
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4,115 | 3,407 | 7,971 | 6,755 | ||||||||||||
Total Operating Expenses
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2,671,930 | 1,164,817 | 4,188,484 | 2,104,767 | ||||||||||||
Loss from Operations
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(2,671,930 | ) | (1,095,461 | ) | (4,135,044 | ) | (2,035,411 | ) | ||||||||
OTHER INCOME/(EXPENSE)
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||||||||||||||||
Realized gain on investment
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- | - | 6,353 | - | ||||||||||||
Loss on change in derivative liability
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(1,817,609 | ) | (1,474,359 | ) | (3,951,326 | ) | (2,336,128 | ) | ||||||||
Commitment fee
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(38,540 | ) | (426,477 | ) | (38,540 | ) | (784,664 | ) | ||||||||
Interest expense
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(623,788 | ) | (300,608 | ) | (1,265,554 | ) | (788,177 | ) | ||||||||
TOTAL OTHER INCOME/(EXPENSE)
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(2,479,937 | ) | (2,201,444 | ) | (5,249,067 | ) | (3,908,969 | ) | ||||||||
NET LOSS
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$ | (5,151,867 | ) | $ | (3,296,905 | ) | $ | (9,384,111 | ) | $ | (5,944,380 | ) | ||||
BASIC LOSS PER SHARE
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$ | (0.07 | ) | $ | (0.12 | ) | $ | (0.14 | ) | $ | (0.26 | ) | ||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING,
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||||||||||||||||
BASIC AND DILUTED
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77,341,561 | 27,826,639 | 68,231,895 | 23,133,809 | ||||||||||||
Additional
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||||||||||||||||||||||||||||
Preferred stock
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Common stock
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Paid-in
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Accumulated
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|||||||||||||||||||||||||
Shares
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Amount
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Shares
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Amount
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Capital
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Deficit
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Total
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||||||||||||||||||||||
Balance at December 31, 2013
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- | - | 53,664,505 | $ | 5,366 | $ | 34,811,538 | $ | (36,330,103 | ) | $ | (1,513,199 | ) | |||||||||||||||
Common stock issued at fair value for services
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- | - | 8,149,994 | 815 | 1,645,575 | - | 1,646,390 | |||||||||||||||||||||
Common stock issuance for conversion of debt
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- | - | 15,607,747 | 1,561 | 1,218,578 | - | 1,220,139 | |||||||||||||||||||||
Common stock issued upon exercise of warrants
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- | - | 5,000,000 | 500 | 749,500 | - | 750,000 | |||||||||||||||||||||
Common stock issuance of supplemental shares
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- | - | 799,983 | 80 | 144,213 | - | 144,293 | |||||||||||||||||||||
Preferred stock issued
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1,000 | - | - | - | - | - | - | |||||||||||||||||||||
Stock and warrant compensation cost
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- | - | - | - | 103,678 | - | 103,678 | |||||||||||||||||||||
Net loss for the six months ended June 30, 2014
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- | - | - | - | - | (9,384,111 | ) | (9,384,111 | ) | |||||||||||||||||||
Balance at June 30, 2014
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1,000 | $ | - | 83,222,229 | $ | 8,322 | $ | 38,673,082 | $ | (45,714,214 | ) | $ | (7,032,810 | ) | ||||||||||||||
1.
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ORGANIZATION
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2.
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BASIS OF PRESENTATION
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3
.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
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3.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Continued)
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·
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Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
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·
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Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
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·
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Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
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(Level 1)
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(Level 2)
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(Level 3)
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||||||||||
Derivative Liability,June 30, 2014
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$ | - | $ | - | $ | 5,883,430 | ||||||
Derivative Liability, December 31, 2013
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$ | - | $ | - | $ | 1,031,484 | ||||||
Beginning balance as of January 1, 2014
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$
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1,031,484
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||
Fair value of derivative liabilities issued
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900,620
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Loss on change in derivative liability
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3,951,326
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Ending balance as of June 30, 2014
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$
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5,883,430
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3.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Continued)
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4.
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CONVERTIBLE PROMISSORY NOTES
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4.
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CONVERTIBLE NOTES PAYABLE (Continued)
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5.
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DERIVATIVE LIABILITIES
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5.
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DERIVATIVE LIABILITIES (Continued)
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Risk free interest rate
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.03% - .13%
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Stock volatility factor
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31% - 133%
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Weighted average expected option life
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6 - 9 months
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Expected dividend yield
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None
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6.
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CAPITAL STOCK
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7.
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OPTIONS AND WARRANTS
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7.
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OPTIONS AND WARRANTS (Continued)
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June 30, 2014
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||||||||
Weighted
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||||||||
Number
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average
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|||||||
of
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exercise
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|||||||
Options
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price
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|||||||
Outstanding, beginning of period
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4,684,643 | $ | 0.53 | |||||
Granted
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- | - | ||||||
Exercised
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- | - | ||||||
Forfeited/Expired
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(1,000,000 | ) | 0.45 | |||||
Outstanding, end of period
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3,684,643 | $ | 0.49 | |||||
Exercisable at the end of period
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1,946,705 | $ | 0.46 | |||||
Weighted average fair value of
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||||||||
options granted during the period
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$ | - | ||||||
Weighted
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||||||||||||||
Average
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||||||||||||||
Stock
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Stock
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Remaining
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||||||||||||
Exercisable
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Options
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Options
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Contractual
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|||||||||||
Prices
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Outstanding
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Exercisable
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Life (years)
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|||||||||||
$ | 0.43 - 7.20 | 1,351,978 | 987,488 | 1.48 - 9.46 | ||||||||||
$ | 0.29 - 0.44 | 2,332,665 | 958,166 | 9.46 | ||||||||||
3,684,643 | 1,945,654 |
June 30, 2014
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||||||||
Weighted
|
||||||||
average
|
||||||||
exercise
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||||||||
Options
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price
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|||||||
Outstanding -January 1, 2014
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43,711,474 | $ | 0.31 | |||||
Granted
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- | - | ||||||
Exercised
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(5,000,000 | ) | 0.15 | |||||
Forfeited
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(5,048,000 | ) | 0.19 | |||||
Outstanding - June 30, 2014
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33,663,474 | $ | 0.27 | |||||
7.
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OPTIONS AND WARRANTS (Continued)
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Weighted
|
||||||||||||||
Average
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||||||||||||||
Remaining
|
||||||||||||||
Exercisable
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Warrants
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Warrants
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Contractual
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|||||||||||
Prices
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Outstanding
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Exercisable
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Life (years)
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|||||||||||
$ | 0.15 - 0.65 | 31,985,596 | 31,985,596 | 0.50 - 3.96 | ||||||||||
$ | 0.26 - 5.70 | 866,362 | 866,362 | 1.10 - 4.22 | ||||||||||
$ | 0.90 - 10.20 | 811,516 | 811,516 | 0.00 - 8.39 | ||||||||||
33,663,474 | 33,663,474 | |||||||||||||
8.
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SUBSEQUENT EVENTS
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●
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business strategy;
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●
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financial strategy;
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●
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intellectual property;
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●
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production;
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●
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future operating results; and
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|
●
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plans, objectives, expectations and intentions contained in this report that are not historical.
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● | On January 8, 2014, we announced that we have agreed to supply our water management solutions to a new East Asian hydroponics venture backed by Orix Corp., Japan’s largest financial services and leasing company. | |
● | On January 21, 2014, we announced that Ennesys recently closed a funding round of 300,000 euros through Wicap Ennesys, a special vehicle created by French crowdfunding site Wiseed, multiplying our seed investment in the joint venture by thirty times. | |
● | On January 28, 2014, we announced that we will collaborate with Israel’s AquaGreen Fish Farms, Ltd to further streamline zero-discharge aquaculture systems for the production of chemical free seafood. | |
● | On February 11, 2014, we announced plans to open a satellite office in the Houston, Texas “Energy Corridor” to be headed by veteran Dow Chemical manager Bill Charneski who has been named general manager of our Petro unit and will divide his time between the Los Angeles headquarters and the new office. | |
● | On March 5, 2014, we announced that the National Algae Association (NAA) has selected our entry-level algae harvester for its model demonstration site, which features best-of-breed algae production systems in permanent operation. | |
● | On April 15, 2014, we announced that we recently agreed to a collaborative exchange of equipment and information with the Catalina Sea Ranch, the first offshore shellfish ranch in U.S. Federal waters. | |
● | On April 22, 2014, we announced a series of showcases to demonstrate the successful removal of frac flowback and produced water pollutants with the P1000 demonstration-scale unit. The roadshow will begin in May on Colorado’s Western Slope and continue on to Texas and California. | |
● | On April 30, 2014, we announced that weekly demonstrations of our algae harvesting process at Houston’s National Algae Association (NAA) are popular draws for new algae producers now investing in commercial-scale algae production systems. | |
● | On May 7, 2014, we announced that we intend to pursue growth through acquisition of one or more service companies with proven ability to treat frac flowback and produced water in the oil and gas industry. | |
● | On May 14, 2014, we announced plans to launch a product line that can treat frack water from end to end. This product, CLEAN-FRAC™, is based on our P1000 platform, which is designed to process 1000 barrels per day of frac flowback and produced water. | |
● | On May 21, 2014, we announced that Burgan One Commercia Establishment (BG-1) has signed a non-exclusive licensing agreement to design, manufacture and distribute water treatment products that incorporate OriginOil technology for the oil & gas and other waste treatment markets in the Middle East. |
● | On May 29, 2014, our board of directors authorized the issuance of 1,000 shares of Series A Preferred Stock our Chief Executive Officer and Director, T. Riggs Eckelberry. The shares were subsequently issued following the filing of the Certificate of Designation for the Series A Preferred Stock on June 3, 2014. The shares have super-majority voting rights with respect to a shareholder vote increasing our authorized share capital. | |
● | On June 4, 2014, we announced that CLEAN-FRACTM 1000, our new demonstration-scale frac water treatment system, was shown to successfully remove oil and contaminants at a showcase for media, public officials and prospective customers. | |
● | On June 11, 2014, we announced that we recently demonstrated our ability to match laboratory performance in the field when we operated at a 1000 barrel per day capacity on contaminated water from a salt water disposal well in Western Colorado. | |
● | On June 16, 2014, we and TriSep Corporation, announced that our EWS, combined with TriSep’s iSep™ ultrafiltration (UF) membranes, effectively removes nearly all oil, turbidity, and bacteria, providing a full solution for drillers to efficiently recycle water flowing back from fracking and production. | |
● | On June 24, 2014, we announced that E3 Services and Solutions, LLC (E3), an acquirer and integrator of industrial technologies in fuel, food and health sectors, has agreed to license EWS for integration in systems designed to reclaim water from hydraulic fracturing and industrial operations. | |
● | On July 2, 2014, we demonstrated the very low energy cost of our Electro Water Separation™ (EWS) technology in treating frac flowback and produced water during large-scale testing at a salt water disposal well in Western Colorado. | |
● | On July 5, 2014, our board of directors dismissed Weinberg & Company, PA as our independent registered public accounting firm and appointed Liggett Vogt & Webb, PA as our new independent registered public accounting firm. | |
● | On July 10, 2014, we announced that in company testing, EWS was found to efficiently generate chlorine dioxide (CLO2), an important pre-treatment step for frac flowback and produced water and other applications. | |
● | On July 15, 2014, we announced that Pearl H20, an affiliate of PACE and our first licensee, installed a commercial scale 1200 bbl/day Pearl Blue™ treatment system last month for demonstration and began a performance testing phase for treating frac flowback and produced water from the Monterey shale formation. | |
● | On August 7, 2014, we announced the publication of independent laboratory results verifying dramatic effectiveness in treating flowback water at a rate greater than 1,000 barrels per day from a disposal site in Western Colorado. |
Exhibit Number
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Description of Exhibit
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101.INS
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XBRL Instance Document.*
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101.SCH
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XBRL Taxonomy Extension Schema.*
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase.*
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase.*
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101.LAB
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XBRL Taxonomy Extension Label Linkbase.*
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101.PRE
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XBRL Extension Presentation Linkbase.*
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*
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Attached as Exhibit 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statement of Operations, (iii) the Statement of Shareholders’ Equity, (iv) the Statement of Cash Flow, and (v) Notes to Financial Statements.
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ORIGINOIL, INC.
|
||||
By:
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/s/ T Riggs Eckelberry | |||
T Riggs Eckelberry
|
||||
Chief Executive Officer (Principal Executive Officer)
|
||||
and Acting Chief Financial Officer (Principal Accounting and Financial Officer)
|
||||
August 14, 2014
|
Certificate of Amendment
(PURSUANT TO NRS 78.385 AND 78.390)
|
|||
USE BLACK INK ONLY· DO NOT HIGHLIGHT
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ABOVE SPACE IS FOR OFFICEUSE ONLY |
This form must be accompanied by appropriate fees. | Nevada Secretary of State Amend Profit-After | ||
Revised: 11-27-13 | |||
/s/ T Riggs Eckelberry
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|||
T Riggs Eckelberry
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Chief Executive Officer (Principal Executive Officer)
|
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and Acting Chief Financial Officer
(Principal Accounting and Financial Officer)
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August 14, 2014
|
/s/ T Riggs Eckelberry
|
||
T Riggs Eckelberry
|
|||
Chief Executive Officer (Principal Executive Officer)
|
|||
and Acting Chief Financial Officer
(Principal Accounting and Financial Officer)
|