UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10‑Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________.
Commission file number: 000-53443
COOL TECHNOLOGIES, INC. |
(Exact name of registrant as specified in its charter) |
Nevada |
|
75-3076597 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
|
|
8875 Hidden River Parkway, Suite 300 Tampa, FL |
|
33637 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: (813) 975-7467
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☒ |
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act: None.
As of September 22, 2020, there were 422,676,611 shares of common stock, $0.001 par value, issued and outstanding.
|
COOL TECHNOLOGIES, INC.
|
|
||
|
|
|
|
4 |
|
||
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
|
|
31 |
|
||
31 |
|
||
|
|
|
|
|
|
||
|
|
|
|
33 |
|
||
33 |
|
||
34 |
|
||
34 |
|
||
34 |
|
||
34 |
|
||
35 |
|
2 |
|
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events, conditions or financial performance forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and include information concerning possible or assumed future results of our operations, including statements about potential sales and revenues; acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.
These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.
Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
The Company previously filed a Current Report on Form 8-K with the Securities and Exchange Commission on May 14, 2020 (the “Current Report”) to avail itself of the relief provided by the Securities and Exchange Commission (SEC) Order under Section 36 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), granting exemptions from specified provisions of the Exchange Act, as set forth in SEC Release No. 34-88465 (the “Order”). By filing the Current Report on Form 8-K, the Company relied on the Order to receive until June 29, 2020 to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (the “Quarterly Report”) due to the circumstances related to COVID-19. In particular, COVID-19 and the extraordinary measures undertaken to minimize its spread has caused severe disruptions in transportation, limited access to facilities resulting in limited support from its staff and professional advisors and interfered with the timely exchange of information. |
3 |
|
Table of Contents |
Item 1. Condensed Consolidated Financial Statements
Cool Technologies, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
|
|
June 30, 2020 (Unaudited) |
|
|
December 31, 2019 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash |
|
$ | 3 |
|
|
$ | 15,306 |
|
Inventory |
|
|
179,593 |
|
|
|
149,744 |
|
Prepaid expenses and other assets |
|
|
-- |
|
|
|
5,000 |
|
Total current assets |
|
|
179,596 |
|
|
|
170,050 |
|
Intangibles |
|
|
220,939 |
|
|
|
213,192 |
|
Equipment, net |
|
|
65,972 |
|
|
|
76,280 |
|
Total assets |
|
$ | 466,507 |
|
|
$ | 459,522 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ | 1,619,324 |
|
|
$ | 1,524,506 |
|
Accrued interest payable |
|
|
579,014 |
|
|
|
407,037 |
|
Accrued liabilities – related party |
|
|
1,084,292 |
|
|
|
913,948 |
|
Customer deposits – related party |
|
|
400,000 |
|
|
|
400,000 |
|
Accrued payroll taxes |
|
|
65,278 |
|
|
|
62,049 |
|
Debt, current portion, net of debt discount |
|
|
2,870,698 |
|
|
|
2,971,232 |
|
Derivative liability |
|
|
519,950 |
|
|
|
712,921 |
|
Total current liabilities |
|
|
7,138,556 |
|
|
|
6,991,693 |
|
|
|
|
|
|
|
|
|
|
Debt, long-term portion |
|
|
107,532 |
|
|
|
29,329 |
|
Total liabilities |
|
|
7,246,088 |
|
|
|
7,021,022 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit): |
|
|
|
|
|
|
|
|
Preferred stock Series A, $.001 par value; 410 shares authorized; 3 issued and outstanding on June 30, 2020 and December 31, 2019 |
|
|
-- |
|
|
|
-- |
|
Preferred stock Series B, $.001 par value; 3,636,360 shares authorized; 2,727,270 issued and outstanding on June 30, 2020 and December 31, 2019 |
|
|
2,727 |
|
|
|
2,727 |
|
Common stock, $.001 par value; 1,000,000,000 shares authorized; 421,676,611 and 267,450,017 shares issued and outstanding on June 30, 2020 and December 31, 2019, respectively |
|
|
421,677 |
|
|
|
267,450 |
|
Additional paid-in capital |
|
|
47,358,001 |
|
|
|
46,265,016 |
|
Common stock issuable |
|
|
58,670 |
|
|
|
58,670 |
|
Common stock held in escrow |
|
|
8,441 |
|
|
|
8,441 |
|
Accumulated deficit |
|
|
(54,572,208 | ) |
|
|
(53,107,440 | ) |
Non-controlling interest |
|
|
(56,889 | ) |
|
|
(56,364 | ) |
Total stockholders’ deficit |
|
|
(6,779,581 | ) |
|
|
(6,561,500 | ) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit |
|
$ | 466,507 |
|
|
$ | 459,522 |
|
See accompanying notes to condensed consolidated financial statements.
4 |
|
Table of Contents |
Cool Technologies, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
Three months ended June 30 |
|
|
Six months ended June 30 |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
$ | -- |
|
|
$ | -- |
|
|
$ | -- |
|
|
$ | -- |
|
Cost of revenues |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Gross profit |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll and related expenses |
|
|
83,408 |
|
|
|
136,794 |
|
|
|
166,158 |
|
|
|
263,254 |
|
Consulting |
|
|
51,000 |
|
|
|
83,383 |
|
|
|
113,000 |
|
|
|
178,707 |
|
Professional fees |
|
|
52,309 |
|
|
|
44,704 |
|
|
|
99,109 |
|
|
|
126,469 |
|
Research and development |
|
|
-- |
|
|
|
32,402 |
|
|
|
10,308 |
|
|
|
47,102 |
|
General and administrative |
|
|
3,544 |
|
|
|
63,832 |
|
|
|
13,350 |
|
|
|
149,698 |
|
Total operating expenses |
|
|
190,261 |
|
|
|
361,115 |
|
|
|
401,925 |
|
|
|
765,230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(190,261 | ) |
|
|
(361,115 | ) |
|
|
(401,925 | ) |
|
|
(765,230 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(522,192 | ) |
|
|
(450,212 | ) |
|
|
(889,503 | ) |
|
|
(1,070,186 | ) |
Change in fair value of derivative liability |
|
|
64,103 |
|
|
|
(526,802 | ) |
|
|
(173,865 | ) |
|
|
(568,620 | ) |
(Loss), gain on extinguishment of debt |
|
|
-- |
|
|
|
(25,860 | ) |
|
|
-- |
|
|
|
208,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(648,350 | ) |
|
|
(1,363,989 | ) |
|
|
(1,465,293 | ) |
|
|
(2,195,711 | ) |
Less: Noncontrolling interest in net loss |
|
|
7 |
|
|
|
(812 | ) |
|
|
525 |
|
|
|
(1,282 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss to shareholders |
|
$ | (648,343 | ) |
|
$ | (1,363,177 | ) |
|
$ | (1,464,768 | ) |
|
$ | (2,194,429 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ | (0.00 | ) |
|
$ | (0.01 | ) |
|
$ | (0.00 | ) |
|
$ | (0.01 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
399,587,534 |
|
|
|
234,366,883 |
|
|
|
367,218,079 |
|
|
|
227,750,844 |
|
See accompanying notes to condensed consolidated financial statements
5 |
|
Table of Contents |
Cool Technologies, Inc. and Subsidiary
Condensed Consolidated Statements of Stockholders’ Deficit
(Unaudited)
|
|
|
|
|
|
|
|
Additional |
|
|
Common |
|
|
Preferred |
|
|
Common Stock |
|
|
|
|
|
Non- |
|
|
|
|
|||||||||||||||||
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Paid-in |
|
|
Stock |
|
|
Stock |
|
|
Held in |
|
|
Accumulated |
|
|
Controlling |
|
|
|
|
|||||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Issuable |
|
|
Issuable |
|
|
Escrow |
|
|
Deficit |
|
|
Interest |
|
|
Total |
|
|||||||||||
December 31, 2018 |
|
|
2,727,290 |
|
|
|
2,727 |
|
|
|
214,705,916 |
|
|
|
214,705 |
|
|
|
45,160,994 |
|
|
|
123,670 |
|
|
|
- |
|
|
|
8,441 |
|
|
|
(49,866,128 | ) |
|
|
(54,764 | ) |
|
|
(4,410,355 | ) |
Sale of stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance of common stock issuable |
|
|
|
|
|
|
|
|
|
|
1,650,000 |
|
|
|
1,650 |
|
|
|
93,350 |
|
|
|
(95,000 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Series A preferred stock to common stock |
|
|
(17 | ) |
|
|
- |
|
|
|
850,000 |
|
|
|
850 |
|
|
|
(850 | ) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Stock issued with debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
30,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
30,000 |
|
Warrants issued for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
32,624 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
32,624 |
|
Warrants issued with debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
112,260 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
112,260 |
|
Debt converted |
|
|
- |
|
|
|
- |
|
|
|
20,128,000 |
|
|
|
20,128 |
|
|
|
231,472 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
251,600 |
|
Debt issued with beneficial conversion feature |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
144,260 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
144,260 |
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,195,711 | ) |
|
|
- |
|
|
|
(2,195,711 | ) |
Noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,282 |
|
|
|
(1,282 | ) |
|
|
- |
|
June 30, 2019 |
|
|
2,727,273 |
|
|
|
2,727 |
|
|
|
237,333,916 |
|
|
|
237,333 |
|
|
|
45,774,110 |
|
|
|
58,670 |
|
|
|
- |
|
|
|
8,441 |
|
|
|
(52,060,557 | ) |
|
|
(56,046 | ) |
|
|
(6,035,322 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
|
2,727,273 |
|
|
|
2,727 |
|
|
|
267,450,017 |
|
|
|
267,450 |
|
|
|
46,265,016 |
|
|
|
58,670 |
|
|
|
- |
|
|
|
8,441 |
|
|
|
(53,107,440 | ) |
|
|
(56,364 | ) |
|
|
(6,561,500 | ) |
Warrants issued with debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,654 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,654 |
|
Debt converted |
|
|
- |
|
|
|
- |
|
|
|
154,226,594 |
|
|
|
154,227 |
|
|
|
1,080,331 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,234,558 |
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,465,293 | ) |
|
|
|
|
|
|
(1,465,293 | ) |
Noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
525 |
|
|
|
(525 | ) |
|
|
- |
|
June 30, 2020 |
|
|
2,727,273 |
|
|
|
2,727 |
|
|
|
421,676,611 |
|
|
|
421,677 |
|
|
|
47,358,001 |
|
|
|
58,670 |
|
|
|
|
|
|
|
8,441 |
|
|
|
(54,572,208 | ) |
|
|
(56,889 | ) |
|
|
(6,779,581 | ) |
See accompanying notes to condensed consolidated financial statements
6 |
|
Table of Contents |
Cool Technologies, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
Six months ended June 30, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net loss |
|
$ | (1,465,293 | ) |
|
$ | (2,195,711 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Warrants issued for services |
|
|
-- |
|
|
|
32,624 |
|
(Gain) on extinguishment of debt |
|
|
-- |
|
|
|
(208,325 | ) |
Non-cash interest expense |
|
|
-- |
|
|
|
34,205 |
|
Change in fair value of derivative liability |
|
|
173,865 |
|
|
|
568,620 |
|
Amortization of debt discount |
|
|
702,888 |
|
|
|
847,238 |
|
Depreciation expense |
|
|
10,308 |
|
|
|
14,696 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Inventory |
|
|
(29,849 | ) |
|
|
(100,848 | ) |
Prepaid assets |
|
|
5,000 |
|
|
|
(14,167 | ) |
Accounts payable |
|
|
94,818 |
|
|
|
150,594 |
|
Accrued interest |
|
|
171,977 |
|
|
|
115,377 |
|
Accrued liabilities – related party |
|
|
170,344 |
|
|
|
(751 | ) |
Accrued payroll taxes |
|
|
3,229 |
|
|
|
-- |
|
Net cash from operating activities |
|
|
(162,713 | ) |
|
|
(756,448 | ) |
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
Intangible assets |
|
|
(7,747 | ) |
|
|
(4,261 | ) |
Net cash from investing activities |
|
|
(7,747 | ) |
|
|
(4,261 | ) |
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds from debt |
|
|
157,000 |
|
|
|
1,220,345 |
|
Payments on debt |
|
|
(1,843 | ) |
|
|
(472,306 | ) |
Net cash from financing activities |
|
|
155,157 |
|
|
|
748,039 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
|
|
(15,303 | ) |
|
|
(12,670 | ) |
|
|
|
|
|
|
|
|
|
Cash, beginning of period |
|
|
15,306 |
|
|
|
24,435 |
|
|
|
|
|
|
|
|
|
|
Cash, end of period |
|
$ | 3 |
|
|
$ | 11,765 |
|
|
|
|
|
|
|
|
|
|
Cash paid for: |
|
|
|
|
|
|
|
|
Interest |
|
$ | 16,167 |
|
|
$ | 17,851 |
|
Income taxes |
|
$ | -- |
|
|
$ | -- |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Derivative liability offset by debt discount |
|
$ | 321,633 |
|
|
$ | 513,128 |
|
Reduction of common stock issuable by issuing stock |
|
|
-- |
|
|
|
95,000 |
|
Debt and interest settled for common stock |
|
|
1,234,558 |
|
|
|
251,600 |
|
Warrants and stock issued with debt |
|
|
12,654 |
|
|
|
30,000 |
|
Stock issued for accrued liabilities – related party |
|
|
-- |
|
|
|
112,260 |
|
See accompanying notes to condensed consolidated financial statements.
7 |
|
Table of Contents |
Cool Technologies, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 – Description of Business and Summary of Significant Accounting Policies
Description of Business
Cool Technologies, Inc. and subsidiary, (“the Company" or "Cool Technologies" or “CoolTech”) was incorporated in the State of Nevada in July 2002. In April 2014, CoolTech formed Ultimate Power Truck, LLC ("Ultimate Power Truck" or "UPT"), of which the Company owns 95% and a shareholder of Cool Technologies owns 5%. Cool Technologies was formerly known as Bibb Corporation, as Z3 Enterprises, and as HPEV, Inc. On August 20, 2015, the Company changed its name to Cool Technologies, Inc.
The Company’s technologies can be divided into two distinct but complementary categories: a) mobile power generation and b) heat dispersion technology.
The Company has developed and is commercializing a mobile power generation system that enables work trucks retrofitted with the system to generate electric power. The Company intends to sell the mobile power generator system to government, commercial and fleet vehicle owners. It may license its system as well. CoolTech has also developed and intends to commercialize patented heat dispersion technologies by licensing them to electric motor, pump and vehicle component manufacturers. In preparation, CoolTech has applied for trademarks for one of its technologies and its acronym. Cool Technologies currently owns one trademark: TEHPC (Totally Enclosed Heat Pipe Cooled).
The Company believes that its proprietary technologies, including the patent portfolio and trade secrets, can help increase the efficiency and positively effect manufacturing cost structure in several large industries beginning with motors/generators and fleet vehicles. The markets for products utilizing the technologies include consumer, industrial, agricultural and military markets, both in the U.S. and worldwide.
As of June 30, 2020, we have seven US patents, one Canadian patent, two granted patents (1 Mexican, 1 Canadian) and two pending applications (1 in the US, 1 in Brazil) covering composite heat structures, motors, and related structures, heat pipe architecture, and applications (commonly referred to as "thermal" or "heat dispersion technology"). Cool Technologies also has Patent Cooperation Treaty ("PCT") applications filed for a heat pipe cooled brake system and radial vent thermal technology as well as a pending PCT application that covers integrated electrical power generation methods and systems.
Basis of Presentation
The accompanying condensed consolidated financial statements as of June 30, 2020, have been derived from unaudited financial statements. They include the accounts of Cool Technologies and Ultimate Power Truck. Intercompany accounts and transactions have been eliminated. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information.
Noncontrolling interest represents the 5% third-party interest in UPT. There are no restrictions on the transfer of funds or net assets from UPT to Cool Technologies.
Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2019.
8 |
|
Table of Contents |
Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. CoolTech has incurred net losses of $54,572,208 since inception and has not commenced operations, raising substantial doubt about its ability to continue as a going concern. Management believes that the Company’s ability to continue as a going concern is dependent on its ability to generate revenue, achieve profitable operations and repay obligations when they come due and raising additional capital. There cannot be any assurance that the Company will ever generate revenue or even if it does generate revenue that it will achieve profitable operations. Furthermore, no assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity financing.
As of the filing date of this Quarterly Report on Form 10-Q, management is negotiating additional non-dilutive funding arrangements to support completion of the initial phases of the Company’s business plan: to license its thermal technologies and applications, including submersible dry-pit applications and to license and sell mobile generation retrofit kits. There can be no assurance, however, that the Company will be successful in accomplishing these objectives. Consequently, it may have to curtail or cease operations if funding is not received by the end of the third quarter.
Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2019 Annual Report.
Reclassification - Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported accrued interest and accounts payable.
Recently Adopted Accounting Guidance
Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU 2016-02 "Leases (Topic 842)"– In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification is to be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the old model but updated to align with certain changes to the lessee model and the new revenue recognition standard. The company adopted this ASU on January 1, 2019. As the Company does not have outstanding leases, adopting this standard did not have a material impact on the Company’s condensed consolidated financial statement or financial statement disclosure.
Recent Accounting Guidance Not Yet Adopted
Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements.
Note 2 – Customer deposits – Related party
These represent advance payments of $400,000 received on orders that have not yet been fulfilled, with companies controlled by the individual who is the 5% owner of UPT and a shareholder of Cool Technologies.
9 |
|
Table of Contents |
Note 3 – Debt
Debt consists of the following:
|
|
June 30, 2020 |
|
|
December 31, 2019 |
|
||
Notes payable |
|
$ | 2,550,000 |
|
|
$ | 2,400,000 |
|
Convertible notes payable |
|
|
493,152 |
|
|
|
952,968 |
|
PPP loan |
|
|
52,612 |
|
|
|
-- |
|
Test vehicle financing |
|
|
36,819 |
|
|
|
37,344 |
|
New Vehicle Financing |
|
|
31,756 |
|
|
|
33,074 |
|
Note payable – related party |
|
|
21,641 |
|
|
|
21,641 |
|
Note payable – UPT minority owner |
|
|
80,000 |
|
|
|
80,000 |
|
|
|
|
3,265,980 |
|
|
|
3,525,027 |
|
Debt discount |
|
|
(287,750 | ) |
|
|
(524,466 | ) |
|
|
|
2,978,230 |
|
|
|
3,000,561 |
|
Less: current portion |
|
|
(2,870,698 | ) |
|
|
2,971,232 |
|
Long-term portion |
|
$ | 107,532 |
|
|
$ | 29,329 |
|
Notes Payable
From September 5 – 7, 2018, the Company entered into Promissory Note Agreements with two accredited investors. CoolTech received $250,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and it issued cashless warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years.
On September 11, 2018, the Company entered into Promissory Note Agreements with an accredited investor. CoolTech received $250,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum on or before the one-year anniversary. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and it issued cashless warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years. On March 16, 2020, the investor signed an amendment to the agreement extending the maturity date until April 30, 2020. As of the filing date, the Company has not received a notice of default.
From September 7 – 17, 2018, the Company entered into Promissory Note Agreements with three accredited investors. CoolTech received $125,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and CoolTech issued cashless warrants to purchase 1,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years.
On September 25, 2018, the Company entered into Promissory Note Agreements with an accredited investor. CoolTech received $125,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum on or before the one-year anniversary. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and CoolTech issued cashless warrants to purchase 1,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years. On March 16, 2020, the investor signed an amendment to the agreement extending the maturity date until April 30, 2020. As of the filing date, the Company has not received a notice of default.
10 |
|
Table of Contents |
On October 2, 2018, the Company entered into a Promissory Note Agreement with an accredited investor. It received $250,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and Cool Technologies issued cashless warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years.
On October 26, 2018, the Company entered into a Promissory Note Agreement with an accredited investor. It received $250,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum on or before the one-year anniversary. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and Cool Technologies issued cashless warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years. On October 26, 2019, the investor signed an amendment to the agreement extending the maturity date for seven months. As of the filing date, the Company has not received a notice of default.
On December 19, 2018, the Company entered into a Promissory Note Agreement with an accredited investor. It received $50,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and Cool Technologies issued cashless warrants to purchase 400,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years.
On February 1, 2019, the Company entered into a Promissory Note Agreement with an accredited investor. It received $75,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and CoolTech agreed to issue 1,000,000 shares of restricted common stock.
On March 13, 2019, the Company and a vendor agreed to convert an overdue $25,000 account payable into a Promissory Note Agreement. CoolTech promised to pay the principal amount together with simple interest of 15% per annum. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property as collateral and CoolTech issued cashless warrants to purchase 200,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years.
On March 18, 2019, the Company entered into a Promissory Note Agreement with an accredited investor. It received $250,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum on or before the one-year anniversary. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property and CoolTech issued cashless warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years. On March 19, 2020, the Company defaulted on the note payable. The principal and interest as of May 19, 2020 total $287,603. As of the filing date, the Company has not received a notice of default for the note. As per the terms of the note, interest will continue to accrue at 15% per annum until paid in full.
On March 19, 2019, the Company entered into a Promissory Note Agreement with an accredited investor. It received $250,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum on or before the one-year anniversary. Furthermore, the Company committed to pay the principal amount and accrued interest within 30 days of the receipt of funds from debt or surety bond financing. In exchange, the Company granted a security interest in all of the Company’s intellectual property and CoolTech issued cashless warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years. On March 19, 2020, the investor signed an amendment to the agreement extending the maturity date for four months.
On January 31, 2020, the Company entered into a Promissory Note Agreement with an accredited investor. It received $36,000 in financing and promised to pay the principal amount together with simple interest of 3% per annum. Furthermore, the Company issued cashless warrants to purchase 4,000,000 shares of common stock at an exercise price of $0.005. The warrants expire after five years.
On May 4, 2020, the Company received loan proceeds of $52,612 (the “PPP Loan”) under the Paycheck Protection Program (“PPP” under the Coronavirus Aid, Relief and Economic Security Act).
11 |
|
Table of Contents |
The PPP Loan is evidenced by a promissory note (the “Note”), between the Company and Small Business Administration (the “Lender”). The Note has a two-year term, bears interest at the rate of 1.00% per annum, and may be prepaid at any time without payment of any premium. No collateral or guarantees were provided in connection with the PPP Notes. No payments of principal or interest are due during the six-month period beginning on the date of the Note (the “Deferral Period”).
The principal and accrued interest under the Note is forgivable after eight weeks if the Company uses the PPP Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise complies with PPP requirements. In order to obtain forgiveness of the PPP Loan, the Company must submit a request and provide satisfactory documentation regarding its compliance with applicable requirements. The Company must repay any unforgiven principal amount of the Note, with interest, on a monthly basis following the Deferral Period. The Company intends to use the proceeds of the PPP Loan for eligible purposes and to pursue forgiveness, although the Company may take action that could cause some or all of the PPP Loan to become ineligible for forgiveness. No assurance can be provided that forgiveness for all or any portion of the PPP Loan will be obtained.
The Note contains customary events of default relating to, among other things, payment defaults and breaches of representations, warranties or covenants. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, or filing suit and obtaining judgment against the Company.
On June 29, 2020, the Company entered into a Promissory Note Agreement with an accredited investor. It received $85,000 in financing and promised to pay the principal amount together with interest of $10,000 by July 29, 2020. As additional compensation, the investor received cashless warrants to purchase 1,000,000 shares of common stock at an exercise price of $0.05. The warrants expire after five years.
In the event of a default, the investor may, upon written notice to the Company, declare all unpaid principal and interest immediately due and payable. As of the filing date, the company has not received a notice of default.
Convertible notes payable
May Convertible Note -- On May 13, 2019, the Company entered into a convertible note agreement. It received $150,000 after an original issue discount of $15,000 in lieu of interest, for a total amount of $165,000 due on December 13, 2019. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the outstanding balance will increase by 25% and a daily penalty of $100 will accrue until the default is remedied.
The note also included a clause which stated that if the effective conversion price is less than $0.01 at any time, the principal amount of the note shall increase by $10,000 and that the conversion price will be permanently redefined to equal 40% of the lowest traded price that occurred during the 15 consecutive trading days immediately preceding the date on which the note holder elects to convert all or part of the note. On December 20, 2019, the effective conversion price reached sub-penny threshold. The principal amount and the subsequent conversion price were adjusted as noted above. Therefore, as of December 31, 2019, the convertible balance remaining totaled $179,950.
On January 7, 2020, Cool Technologies issued 5,000,000 shares of common stock to LGH Investments, LLC upon partial conversion of $17,920 on convertible debt of $179,950. On January 21, 2020, Cool Technologies issued 10,000,000 shares of common stock to LGH Investments, LLC upon partial conversion of $22,400 on convertible debt of $179,950. On February 24, 2020, Cool Technologies issued 15,000,000 shares of common stock to LGH Investments, LLC upon partial conversion of $17,400 on convertible debt of $179,630. On March 5, 2020, Cool Technologies issued 6,500,000 shares of common stock to LGH Investments, LLC upon partial conversion of $8,840 on convertible debt of $179,630. On March 24, 2020, Cool Technologies issued 8,500,000 shares of common stock to LGH Investments, LLC upon partial conversion of $23,120 on convertible debt of $179,950. As of June 30, 2020, the convertible balance remaining totaled approximately $21,270.
June Convertible Note -- On June 6, 2019, the Company entered into a convertible note agreement. It received $130,000 with an original issue discount of $13,000 and an annual interest rate of 8%. The principal ($143,000) and interest will be due on June 6, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 24% per annum, require the Company to pay the product of the then outstanding principal amount, plus accrued interest and default interest, divided by the conversion price multiplied by the highest price at which the common stock traded at any time between the issuance date and the date of the event of default.
12 |
|
Table of Contents |
On December 19, 2019, Cool Technologies issued 1,128,687 shares of common stock to the holder upon partial conversion of $10,418 in debt. On December 24, 2019, the Company issued 2,674,064 shares of common stock to the holder upon partial conversion of $20,884 in debt.
On January 13, 2020, Cool Technologies issued 4,220,881 shares of common stock to Eagle Equities, LLC upon partial conversion of $20,978 on convertible debt of $143,300. On January 28, 2020, Cool Technologies issued 6,173,709 shares of common stock to Eagles Equities, LLC upon partial conversion of $21,040 on convertible debt of $143,300. On February 3, 2020, Cool Technologies issued 9,573,426 shares of common stock to Eagle Equities, LLC upon partial conversion of $21,071 on convertible debt of $143,300. On February 13, 2020, Cool Technologies issued 11,992,022 shares of common stock to Eagle Equities, LLC upon partial conversion of $26,394 on convertible debt of $143,300. On March 2, 2020, Cool Technologies issued 9,820,030 shares of common stock to Eagle Equities, LLC upon partial conversion of $26,494 on convertible debt of $143,300. As of June 30, 2020, the balance remaining totals approximately $2,000.
July Convertible Note – On July 3, 2019, the Company entered into a convertible note agreement. It received $150,000 with an original issue discount of $15,300 in lieu of interest, for a total amount of $168,300 plus 8% annual interest due on July 3, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of CoolTech’s common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 22% per annum, require the Company to redeem all or any portion of the note at a premium of 150%.
On January 3, 2020, Cool Technologies issued 2,238,806 shares of common stock to PowerUp Lending Group Ltd. upon partial conversion of $15,000 on convertible debt of $168,300. On January 8, 2020, Cool Technologies issued 3,174,603 shares of common stock to PowerUp Lending Group Ltd. upon partial conversion of $20,000 on convertible debt of $168,300. On January 14, 2020, Cool Technologies issued 3,921,569 shares of common stock to PowerUp Lending Group, Ltd. upon partial conversion of $20,000 on convertible debt of $168,300. On January 16, 2020, Cool Technologies issued 4,444,444 shares of common stock to PowerUp Lending Group, Ltd. upon partial conversion of $20,000 on convertible debt of $168,300. On January 21, 2020, Cool Technologies issued 5,111,111 shares of common stock to PowerUp Lending Group, Ltd. upon partial conversion of $23,000 on convertible debt of $168,300. On January 30, 2020, Cool Technologies issued 7,142,857 shares of common stock to PowerUp Lending Group, Ltd. upon partial conversion of $20,000 on convertible debt of $168,300. On February 3, 2020, Cool Technologies wired $72,000 to PowerUp Lending Group, Ltd. and the note with convertible debt of $168,300 was retired.
August Convertible Note -- On August 28, 2019, the Company entered into a convertible note agreement. It received $115,000 with an original issue discount of $11,500 and an annual interest rate of 8%. The principal ($126,500) and interest will be due on August 28, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 24% per annum or the highest rate of interest permitted by law.
On March 10, 2020, Cool Technologies issued 10,282,003 shares of common stock to Eagle Equities, LLC upon partial conversion of $40,151 on convertible debt of $126,500. On May 5, 2020, the Company issued 4,460,094 shares of common stock upon partial conversion of $31,667. On June 5, 2020, the Company issued 3,325,335 shares of common stock upon partial conversion of $25,000. On June 15, 2020, the Company issued 3,924,883 shares of common stock upon partial conversion $23,408. On June 30, 2020, the Company issued 2,067,880 shares of common stock upon final conversion of $11,746 and the note was retired.
October Convertible Note -- On October 3, 2019, the Company entered into a convertible note agreement. It issued 350,000 inducement shares of restricted common stock and received $115,000 with an original issue discount of $11,500 and an annual interest rate of 8%. The principal ($126,500) and interest will be due on October 2, 2020. After 180 days, at the holder’s option, a portion or all the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest closing price during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 24% per annum or the highest rate of interest permitted by law. As of June 30, 2020, the remaining balance totaled approximately $126,500.
13 |
|
Table of Contents |
November Convertible Note -- On November 9, 2019, the Company entered into a convertible note agreement. It received $126,000 with an original issue discount of $13,000 and an annual interest rate of 8%. The principal ($141,000) and interest will be due on November 6, 2020. After 180 days, at the holder’s option, a portion or all the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest closing price during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 24% per annum or the highest rate of interest permitted by law.
On May 8, 2020, Cool Technologies issued 2,352,941 shares of common stock upon partial conversion of $20,000. On May 14, 2020, the noteholder sold the convertible note to LGH Investments, LLC for $162,700. One clause was added which states that the note shall have a cash redemption premium of 140% of the outstanding principal plus accrued and default interest until the maturity date. Otherwise, all terms and conditions remained the same. As of June 30, 2020, the remaining balance totaled approximately $162,700.
December Convertible Note -- On December 5, 2019, the Company entered into a convertible note agreement. It received $103,000 with an original issue discount of $6,000 and an annual interest rate of 8%. The principal ($109,000) and interest will be due on December 5, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest Volume Weighted Average Price (VWAP) during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 18% per annum or the highest rate of interest permitted by law.
On May 8, 2020, the noteholder sold the convertible note to LGH Investments, LLC for $144,313. All terms and conditions remained the same. As of June 30, 2020, the remaining balance totaled approximately $144,313.
January Convertible Note -- On January 30, 2020, the Company entered into a convertible note agreement with an accredited investor. It received $36,000 after an original issue discount of $4,000 in lieu of interest, for a total amount of $40,000 due on July 30, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the outstanding balance will increase by 25% and a daily penalty of $100 will accrue until the default is remedied. As of June 30, 2020, the remaining balance totaled $40,000. As of the filing date, the Company has not received a notice of default.
Test Vehicle Financing
In October 2014, the Company entered into financing agreements for the purchase of test vehicles, bearing interest at 5.99% payable monthly over five years, collateralized by the vehicles.
In June 2019, the Company traded in one test vehicle and purchased another with financing of approximately $44,500, bearing an interest rate of 9.92% payable monthly over a 5-year period.
Note payable – UPT minority owner
The minority owner of UPT owns 5% of the subsidiary. The terms of the note have not been finalized.
Warrants Issued with Debt
When the Company issues notes payable, it may also be required to issue warrants.
14 |
|
Table of Contents |
|
|
Number of Warrants |
|
|
Weighted- average Exercise Price |
|
|
Weighted-average Remaining Life (Years) |
|
|
Aggregate Intrinsic Value |
|
||||
Outstanding, December 31, 2019 |
|
|
18,467,717 |
|
|
|
0.05 |
|
|
|
3.7 |
|
|
$ | 941,144 |
|
Granted |
|
|
4,000,000 |
|
|
|
0.05 |
|
|
|
4.9 |
|
|
$ | 17,200 |
|
Forfeited or expired |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Exercised |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Outstanding, June 30, 2020 |
|
|
22,467,717 |
|
|
|
0.04 |
|
|
|
3.8 |
|
|
$ | 958,344 |
|
Exercisable, June 30, 2020 |
|
|
22,467,717 |
|
|
|
0.04 |
|
|
|
3.8 |
|
|
$ | 958,344 |
|
Transactions with Related Parties
The note payable - related party, in the amount of $21,641, is held by the Company's Chief Financial Officer and relates to unreimbursed expenses.
The note payable - UPT minority owner, in the amount of $80,000, is held by the 5% minority owner of UPT. The terms of the note have not been finalized.
Future contractual maturities of debt are as follows:
Year ending December 31, |
|
|
|
|
|
|
|
|
|
2020 |
|
$ | 3,158,448 |
|
2021 |
|
|
68,110 |
|
2022 |
|
|
15,498 |
|
2023 |
|
|
15,498 |
|
2024 |
|
|
8,426 |
|
|
|
$ | 3,265,980 |
|
Note 4 – Derivative Liability
Under the terms of the May 2019, June 2019, October 2019, November 2019, December 2019 and January 2020 Convertible Notes, the Company identified derivative instruments arising from embedded conversion features.
The following summarizes the Black-Scholes assumptions used to estimate the fair value of the derivative liability at the dates of issuance and the revaluation dates:
|
|
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
Volatility |
|
106.4-554.9 |
% |
|
Risk-free interest rate |
|
0.01–2.42 |
% |
|
Expected life (years) |
|
0.07–1.14 |
|
|
Dividend yield |
|
|
-- |
|
Changes in the derivative liability were as follows:
|
|
Six Months Ended June 30, 2020 |
|
|||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||
Convertible debt and other derivative liabilities on December 31, 2019 |
|
$ | -- |
|
|
$ | -- |
|
|
$ | 712,921 |
|
Conversions of convertible debt |
|
|
-- |
|
|
|
-- |
|
|
|
(688,469 | ) |
Issuance of convertible debt and other derivatives |
|
|
-- |
|
|
|
-- |
|
|
|
321,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value |
|
|
-- |
|
|
|
-- |
|
|
|
173,865 |
|
Convertible debt and other derivative liabilities on June 30, 2020 |
|
$ | -- |
|
|
$ | -- |
|
|
$ | 519,950 |
|
15 |
|
Table of Contents |
Note 5 -- Commitments and Contingencies
Securities and Exchange Commission Settlement
On September 20, 2018, the Securities and Exchange Commission (SEC) approved an offer to settle the enforcement proceedings against the Company pursuant to Section 21C of the Securities Exchange Act of 1934.
These proceedings arose out of the violation of the Regulation S-X requirement that interim financial statements filed as part of a Form 10-Q be reviewed by an independent public accounting firm prior to filing.
On three occasions, specifically, May 20, 2013, August 19, 2013 and August 22, 2016, Cool Technologies filed Form 10-Qs that contained financial statements that were not reviewed by an independent public accounting firm. In two cases, the Company properly disclosed that the 10Q’s were “unaudited and unreviewed” as set forth by the guidance in the Division of Corporation Finance Financial Reporting Manual Section 4410.3 and in each case, the Company subsequently filed a restated and amended Form 10-Q/A that complied with the Interim Review Requirement. In no instance were the filings ever subjected to audit challenge.
Pursuant to the enforcement proceeding instituted by the SEC, the Company settled for a fine of $75,000 and agreed to cease and desist from any future violations of Sections 13(a) of the Exchange Act and Rule 13a-13 thereunder, and Rule 8-03 of Regulation S-X. As of the date of this filing, the Company still owes the SEC $50,000.
From time to time, the Company may be a party to other legal proceedings. Management currently believes that the ultimate resolution of these other matters, if any, and after consideration of amounts accrued, will not have a material adverse effect on the consolidated results of operations, financial position, or cash flow.
Note 6 – Equity
Preferred Stock
Cool Technologies has 15,000,000 preferred shares authorized and 3 Series A and 2,727,270 Series B preferred shares issued and outstanding as of June 30, 2020.
On August 12, 2016, the Company entered into a Securities Purchase Agreement with four accredited investors pursuant to which it sold 3,636,360 shares of the Company’s Series B Convertible Preferred Stock. Each share of the preferred stock is convertible into one share of the Company’s common stock. The conversion price of the preferred stock is equal to the $0.055.
In addition to the preferred stock, the Securities Purchase Agreement included warrants to purchase 3,636,360 shares of the Company’s common stock at an exercise price of $0.07 per share. The warrants cannot be exercised on a cashless basis. The aggregate purchase price of the preferred stock and warrants was $200,000, of which $150,000 was paid in cash and $50,000 was paid in services.
In connection with the sale of the Preferred Stock, on October 20, 2016, the Company filed with the Secretary of the State of Nevada, an amended Certificate of Designations of the Rights, Preferences, Privileges and Restrictions, which have not been set forth in the Certificate of Designation of the Series B Convertible Preferred Stock nor the first Amendment to Certificate of Designation filed on August 12, 2016.
The preferred stock has the same rights as if each share of Series B Convertible Preferred Stock were converted into one share of common stock. For so long as the Series B Convertible Preferred Stock is issued and outstanding, the holders of such Series B Convertible Preferred Stock vote together as a single class with the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock, with the holders of Series B Stock being entitled to 66 2/3% of the total votes on all such matters.
16 |
|
Table of Contents |
In the event of the death of a holder of the Class B Preferred Stock, or a liquidation, winding up or bankruptcy of a holder which is an entity, all voting rights of the Class B Preferred Stock shall cease.
The holder of any shares of Class B Preferred Stock have the right to convert their shares into common stock at any time, in a conversion ratio of one share of common stock for each share of Class B Preferred. If the Company’s common stock trades or is quoted at a price per share in excess of $2.25 for any twenty consecutive day trading period, the Class B Preferred Stock will automatically be convertible into the common stock of the Company in a conversion ratio of one share of common stock for each share of Class B Preferred.
The holders of Class B Preferred Stock are not entitled to receive any distributions in the event of any liquidation, dissolution or winding up of the Company.
The warrants cannot be exercised on a cashless basis.
On May 8, 2017, Inverom Corporation converted its 909,090 Series B preferred shares into 909,090 shares of common stock. This represented all of the shares of Series B stock held by Inverom Corporation.
Preferred stock issuable on the consolidated balance sheets represents preferred stock to be issued for either cash received, or services performed. As of June 30, 2020, and 2019, the number of shares of preferred stock to be issued was 0 and the number of shares of Series B preferred stock was 2,727,270.
KHIC, Inc., a related party holds the remaining 3 shares of Series A Preferred Stock. Each share of Series A Preferred Stock ("Preferred Stock") is convertible into 50,000 shares of common stock. Each share of preferred stock has voting rights as if they were converted into 50,000 shares of common stock. The holders of each share of preferred stock then outstanding shall be entitled to be paid out of the Available Funds and Assets (as defined in the "Certificate of Designation"), and prior and in preference to any payment or distribution (or any setting a part of any payment or distribution) of any Available Funds and Assets on any shares of common stock, an amount per preferred share equal to the Preferred Stock Liquidation Price ($2,500 per share).
Common Stock
On September 13, 2019, stockholders holding shares that entitled them to exercise at least a majority of the voting power, voted in favor of increasing the number of authorized shares of common stock, from 350,000,000 shares to 500,000,000 shares.
On February 13, 2020, stockholders holding shares that entitled them to exercise at least a majority of the voting power, voted in favor of increasing the number of authorized shares of common stock, from 500,000,000 shares to 1,000,000,000 shares.
Common stock issuable on the consolidated balance sheets represents common stock to be issued for either cash received, or services performed. As of June 30, 2020 and December 31, 2019, the number of shares of common stock to be issued was 494,697 shares.
Common stock warrants issued with the sale of common stock
When the Company sells shares of its common stock the buyer also typically receives fully vested common stock warrants with a maximum contractual term of 3-5 years. A summary of common stock warrants issued with the sale of common stock as of June 30, 2020, and changes during the period then ended is presented below:
|
|
Number of Warrants |
|
|
Weighted-average Exercise Price |
|
|
Weighted-average Remaining Life (Years) |
|
|
Aggregate Intrinsic Value |
|
||||
Outstanding, December 31, 2019 |
|
|
45,514,168 |
|
|
$ | 0.12 |
|
|
|
1.1 |
|
|
$ | -- |
|
Granted |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Forfeited or cancelled |
|
|
(14,095,833 | ) |
|
|
0.15 |
|
|
|
-- |
|
|
|
-- |
|
Outstanding, June 30, 2020 |
|
|
31,418,335 |
|
|
|
0.10 |
|
|
|
0.8 |
|
|
|
-- |
|
Exercisable, June 30, 2020 |
|
|
31,418,335 |
|
|
$ | 0.10 |
|
|
|
0.8 |
|
|
$ | -- |
|
17 |
|
Table of Contents |
Note 7 – Share-based payments
Amounts recognized as expense in the consolidated statements of operations related to share-based payments are as follows:
|
|
Six months ended June 30, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Nonemployee warrants – fully-vested upon issuance |
|
$ | -- |
|
|
$ | 32,624 |
|
|
|
|
|
|
|
|
|
|
Total share-based expense charged against income |
|
$ | -- |
|
|
$ | 32,624 |
|
|
|
|
|
|
|
|
|
|
Impact on net loss per common share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ | (0.00 | ) |
|
$ | (0.00 | ) |
Nonemployee common stock warrants -- Fully-vested upon issuance
Cool Technologies may issue fully vested common stock warrants with a maximum contractual term of 5 years to non-employees in return for services or to satisfy liabilities, such as accrued interest. The following summarizes the activity for common stock warrants that were fully vested upon issuance:
|
|
Number of Warrants |
|
|
Weighted-average Exercise Price |
|
|
Weighted-average Remaining Life (Years) |
|
|
Aggregate Intrinsic Value |
|
||||
Outstanding, December 31, 2019 |
|
|
9,735,836 |
|
|
|
0.36 |
|
|
|
1.3 |
|
|
$ | 2,000 |
|
Granted |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Forfeited or expired |
|
|
(900,000 | ) |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Outstanding, June 30, 2020 |
|
|
8,835,836 |
|
|
|
0.09 |
|
|
|
0.9 |
|
|
$ | -- |
|
Exercisable, June 30, 2020 |
|
|
8,835,836 |
|
|
|
0.09 |
|
|
|
0.9 |
|
|
$ | -- |
|
Note 8 – Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. Diluted net loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised.
The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss available for stockholders |
|
$ | (648,343 | ) |
|
$ | (1,363,177 | ) |
|
$ | (1,464,768 | ) |
|
$ | (2,194,429 | ) |
Weighted average outstanding shares of common stock |
|
|
399,587,534 |
|
|
|
234,366,883 |
|
|
|
367,218,079 |
|
|
|
227,750,844 |
|
Dilutive effect of stock options and warrants |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Common stock and equivalents |
|
|
399,587,534 |
|
|
|
234,366,883 |
|
|
|
367,218,079 |
|
|
|
227,750,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – Basic and diluted |
|
$ | (0.00 | ) |
|
$ | (0.01 | ) |
|
$ | (0.00 | ) |
|
$ | (0.01 | ) |
18 |
|
Table of Contents |
Outstanding stock options and common stock warrants are considered anti-dilutive because the Company is in a net loss position. The following summarizes equity instruments that may, in the future, have a dilutive effect on earnings per share:
|
|
June 30 |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Stock options |
|
|
4,000,000 |
|
|
|
4,000,000 |
|
Common stock warrants |
|
|
68,371,888 |
|
|
|
72,239,539 |
|
Common stock issuable |
|
|
494,697 |
|
|
|
494,697 |
|
Convertible notes |
|
|
98,025,667 |
|
|
|
31,285,755 |
|
Convertible preferred stock |
|
|
2,877,270 |
|
|
|
2,877,270 |
|
Total |
|
|
173,769,522 |
|
|
|
110,897,261 |
|
Total exercisable on June 30 |
|
|
169,274,825 |
|
|
|
112,402,564 |
|
Note 9 – Subsequent Events
On July 3, 2020, the Company signed a promissory note agreement with an accredited investor. It received $85,000 after an original issue discount of $8,500 in lieu of interest. The total amount of $93,500 will be due on August 3, 2020. In the event of default, the outstanding balance will accrue interest of either 18% or maximum rate permitted by law until the default is remedied. As of the filing date, the Company has not received a notice of default.
On August 10, 2020, the Nevada Secretary of State accepted and filed the Company’s Certificate of Amendment to the Company’s Articles of Incorporation. The filing amends Article II of the Articles of Incorporation by increasing the number of authorized shares of common stock from 500,000,000 to 1,000,000,000.
On September 15, 2020, the Company signed a promissory note agreement with an accredited investor. It issued 1,000,000 inducement shares of restricted common stock and received $60,000 after an original issue discount of $6,000. The total amount of $66,000 will be due on April 15, 2021. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the outstanding balance will increase by 25% and a daily penalty of $100 will accrue until the default is remedied.
19 |
|
Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Cool Technologies, Inc. and subsidiary, (“the Company" or "Cool Technologies" or “CoolTech”) was incorporated in the State of Nevada in July 2002. In April 2014, CoolTech formed Ultimate Power Truck, LLC ("Ultimate Power Truck" or "UPT"), of which the Company owns 95% and a shareholder of Cool Technologies owns 5%. Cool Technologies was formerly known as Bibb Corporation, as Z3 Enterprises, and as HPEV, Inc. On August 20, 2015, the Company changed its name to Cool Technologies, Inc.
The Company’s technologies are divided into two distinct but complementary categories: mobile power generation and heat dispersion technology.
The Company has developed a mobile power generation system (MG) that enables work trucks to generate electric power by running an in-chassis generator. The MG system can be retrofit onto new and existing American trucks. CoolTech intends to sell the mobile electric power system to government, commercial and fleet vehicle owners. Sales are expected to occur through the direct efforts of the Company, its sales agents and its joint venture partners.CoolTechmay also license the MG system as well.
The markets targeted include consumer, agricultural, industrial, military and emergency responders, both in the U.S. and worldwide.
CoolTech has also developed heat dispersion technologies based on proprietary composite heat structures and heat pipe architecture in various product platforms such as electric motors, pumps, turbines, bearings and vehicle components. In preparation, Cool Technologies filed for and received a trademark for Totally Enclosed Heat Pipe Cooled: TEHPC.
When a generator is enhanced by CoolTech’s patented thermal technologies, it should be able to output more power than any other generator of its size on the market. That’s because third party testing has demonstrated that the cooling provided by the thermal technologies can help increase the efficiency of electric motors.
Furthermore, management believes that the technologies will increase the lifespan as well as help meet regulatory emissions standards for electric motors and other heat producing equipment and components. The simplicity of the heat pipe architecture as well as the fact that it provides effective new applications for existing manufacturing processes should enhance the cost structure in several large industries including motor/generator and engine manufacturing.
As of June 30, 2020, we have seven US patents, one Canadian patent, two granted patents (1 Mexican, 1 Canadian) and two pending applications (1 in the US, 1 in Brazil) covering composite heat structures, motors, and related structures, heat pipe architecture, and applications (commonly referred to as "thermal" or "heat dispersion technology"). We also have one Patent Cooperation Treaty ("PCT") application pending that covers integrated electrical power generation methods and systems.
The Company intends to commercialize its patents by integrating the thermal technologies and applications with Original Equipment Manufacturer (OEM) partners and by licensing them to electric motor, generator, pump and vehicle component (brake, resistor, caliper) manufacturers.
We believe the benefits of our mobile power generation systems are quickly realized once potential customers see it in operation. Public demonstrations of the MG systems began in April 2017. An inspection and performance demonstration for Mexican government officials and business leaders occurred in May 2018. Feedback from initial viewers resulted in more government officials and fruit growers coming to see the MG power equipment and to learn about the water purification options in March 2019. Even more officials and growers followed -- flying to St. Louis for a review in May 2019.
We generated our first Mobile Generation order during the quarter ended June 30, 2014 and received a partial deposit in advance of completing the sale. On June 9, 2017, the Company received a purchase order for 10 MG systems from Craftsmen Industries. As Craftsmen builds custom vehicles designed to the individual specifications of their customers whose businesses and technical requirements vary widely, it is impossible to estimate when the order will be fulfilled.
20 |
|
Table of Contents |
In November 2017, the Company received a purchase commitment for 234 MG systems from a Mexican Producers’ Union. That was followed by a purchase commitment for 24 to 50 MG units from a second Mexican Producers’ Union in December 2017. On April 9, 2018, the first Mexican Producers’ Union executed a purchase order with the Company for 10 Ford F350s with MG80 kVA systems installed. On May 7, 2019, Turkish technology company Belirti Teknoloji, A.S. delivered a purchase order for six hundred MG80, MG125 and MG200 Mobile Generation systems. As of the June 30, 2020, the Company does not have the funds available to fulfill the orders.
Craftsmen Industries was selected to produce the first systems due to its engineering capabilities and extensive facilities. In January 2019, it began production on the initial vehicles and completed an initial production run vehicle two months later.
We have not generated any revenues to date. Consequently, there can be no assurances that the Company will be able to generate new orders nor fulfill the existing ones nor address all the requirements of all the interested parties.
Management is pursuing various financing alternatives, based upon a third-party assessment of the historically demonstrated or contractually committed profit-earning capacities of our IP. We see this as the best path forward for non-dilutive funding.
If funding is received, it will be used to support completion of the initial phases of our business plan, which is to license our thermal technologies and applications; to license or sell a mobile electric power system; and to license our submersible motor dry pit technologies and/or to bring to market our technologies and applications through key distribution and joint venture partners. As of the filing date, it is uncertain whether COVID-19 will have a significant impact on production and distribution of Company products.
The occurrence of an uncontrollable event such as the COVID19 pandemic has negatively affected our operations. A pandemic typically results in social distancing, travel bans and quarantine. This has limited access to our facilities, customers, management, support staff and professional advisors. These, in turn, have impacted our operations and financial condition. It may also impact demand for our products and may continue to hamper our efforts to provide our investors with timely information and comply with our filing obligations with the Securities and Exchange Commission.
Recent Developments
National Union of Jatropha Producers
In November 2017, the Company received a purchase commitment for 234 MG systems from the National Union of Producers of Jatropha in Mexico (Jatropha).
Jatropha has established a center for processing oil from Jatropha seeds for biofuel production. Through their union of producers, Jatropha plans to introduce the MG and promote the product to their supplier network.
The purchase commitment stipulates that CoolTech will furnish Jatropha with an MG80 retro-fitted onto a Ford F-350 truck within 60 business days of the signed of the agreement. To ensure the system is optimized to meet Jatropha’s needs, CoolTech set the terms of the agreement to allow both teams to gather data and provide performance feedback another 30 to 60 days. Upon completion of this period, Jatropha will release the balance of the order for 233 units. Payment terms require 50% down and 50% at time of shipment, FOB (Freight on Board) from Cool Technologies’ dock.
21 |
|
Table of Contents |
On February 6, 2018, Jatropha signed an agreement to amend their previous purchase agreement. It eliminates the 60 business day deadline for the truck to be shipped to Mexico. Under the new agreement, representatives from Jatropha will come to Colorado for an inspection and live performance demonstration. If approved, the generator-equipped trucks will go into production as specified in the original purchase agreement.
A representative of the National Union of Jatropha Producers approved the generator-equipped truck. It will go into production as the Company and Jatropha secure final funding.
On April 11, 2019, Jatropha signed an addendum to update the terms and conditions originally set forth in the Agreement of Principal Terms dated November 7, 2017. In light of the higher electrical output and new options offered by the Company, Jatropha amended its purchase commitment to include 50 MG80 (80 kVA) Systems with mobile desalination units capable of producing 2500 gallons of fresh water per day, 100 MG125 (125 kVA) systems, 50 MG200 (200 kVA) Systems and 50 HydroQubes (a hydrogen infusion system that improves fuel economy) composed of 2 cells. The addendum states that CoolTech shall start production and fulfillment of the orders no later than the 3rd Quarter of 2019. As of the filing date, the addendum has not been updated nor has the commitment been withdrawn.
The value of the purchase commitment is expected to be between $17,000,000 and $22,000,000. On April 9, 2018, Jatropha executed a purchase order with the Company for 10 Ford F-350s with MG80 kVA systems installed. The value of the initial order is in excess of one million dollars. Completion of the order is dependent upon Jatropha securing a letter of credit within 45 days of the order. The process of securing the letter of credit is underway (See ‘Mexican Government’ heading below) and the Company is not enforcing the timeline set forth in the order.
National Union of Producers in Mexico for the state of Veracruz
In December 2017, the Company received a purchase commitment for 24 to 50 MG units from the National Union of Producers in Mexico for the state of Veracruz. Depending on the respective numbers of MG55 and MG80 kVA systems ordered, the Company expects the value of the commitment to range between $1,200,000 and $3,900,000.
The union represents farmers who grow labor and energy intensive crops such as sugar cane, tobacco, bananas, coffee, rice and vanilla. It expects that the MG systems will increase yields, exports and incomes for its members and their communities.
According to the contract, the Company will deliver an MG 80 retro-fitted onto a Ford F-350 truck within 60 business days.
On February 23, 2018, Veracruz signed an agreement to amend their previous purchase agreement. It eliminates the 60 business day deadline for the truck to be shipped to Mexico. Under the new agreement, representatives from Veracruz will come to Colorado for an inspection and live performance demonstration. If approved, the generator-equipped trucks will go into production as specified in the original purchase agreement.
A representative of the National Union of Jatropha Producers approved the generator-equipped truck. It will go into production as the Company and Veracruz secure final funding.
Payment terms require 50% down and 50% at time of shipment, each payable with a bank letter of credit. Product delivery will be considered FOB (Freight on Board) from Cool Technologies’ shipping dock.
22 |
|
Table of Contents |
Aon Risk Services Central, Inc and Lee and Hayes, PLLC
On January 18, 2018, the Company entered into an agreement with Aon Risk Services Central, Inc. and Lee and Hayes, PLLC, through its operating unit, 601West, which provides intellectual property (“IP”) analytics, to assess the value of the Company’s IP. As set forth in the agreement, the assessment will be founded on historically demonstrated or contractually committed profit-earning capacities of the IP and may be used to obtain financing, including but not limited to, non-dilutive financing. The Company is using the valuation to obtain non-dilutive funding.
Live MG80 Demonstration in Fort Collins, Colorado
On May 4, 2018, nine representatives from Mexico’s farming, banking, and government sectors flew to Fort Collins, Colorado for a live demonstration of CoolTech’s generator-equipped truck. The demonstration showcased the capabilities and ease of operation of the system. The Company demonstrated how an operator is able to control the generator from the comfort and safety of the truck’s cab using a Panasonic Toughpad. The Company also used the electricity from the truck to power a screw compressor, an industrial fan, and an industrial load bank. Additional capabilities, such as purifying water and using batteries and solar power to make operations more sustainable and environmentally friendly were discussed with the attendees.
A representative of the National Union of Jatropha Producers approved the generator-equipped truck. CoolTech plans to put this into production as soon as final funding is secured. Based on initial feedback and subsequent meetings and conversations with other attendees, the Company expects the demonstration will lead to new orders.
Unveiling of Initial Production Run Vehicle
On March 27, 2019 the Company unveiled the initial production run of its Mobile Generation (MG) work trucks for inspection by an audience of agricultural and community leaders from Latin America at Craftsmen Industries.
The itinerary for the showcase event included a tour of the St Louis manufacturing facility and inspection of the first production run MG vehicle in operation as it powered a variety of equipment.
The purpose of the viewing was not only to show the truck’s capabilities, but to get feedback from the attendees and learn what are their specific needs and applications as well as what features and functions are important to them.
Mexican Government
Fulfillment of payment terms for both the Jatropha orders and the Veracruz purchase commitment require the participation of the Mexican government as it is a major source of funding for both unions.
On April 25, 2019, the CEO of the Company flew to Mexico City to meet with the Secretaries of Energy, Agriculture and the Environment for the new administration as well as federal deputies and representatives.
On May 13, 2019, government officials and fruit growers were at Craftsmen Industries in St. Louis for a review of a first run MG80 production vehicle and water purification/desalination options.
23 |
|
Table of Contents |
Introduction of new options
During the past quarter, the Company has introduced new options which include an MG System that generates up to 200 kVA of electric power, water purification and desalination systems.
The truck-mounted water purification and desalination units can produce from 2,800 to 10,000 gallons of fresh water every day. Assuming the average person needs 2 liters per day, 10,000 gallons is enough for 18,927 people.
A 30 kVA MG system could power any size unit as well as the pumps to deliver the water or five units at once which would conceivably be enough to keep the population of Santa Barbara hydrated. It could even tow a 1,250 gallon water tanker, if needed.
The purification and desalinization units feature fully automated controls and monitoring. When combined with the optional telematics offered in the vehicles, each unit could be remotely controlled and monitored from distant locations.
Belirti Teknoloji
On May 7, 2019, the Company entered into a joint venture agreement (“JV”) with Turkish technology company Belirti Teknoloji, A.S. (“BelirtiTech”). To launch the business, BelirtiTech awarded Cool Technologies a purchase order for up to $42 million USD for the purchase of several different models of its Mobile Generation kits. The purchase order will supply the JV with its initial inventory for resale into the Middle East and some African nations. The Company is actively working with the customer’s bank in addition to insurance companies and other financial entities to facilitate the financing of the orders. As of the date of this filing, the funds to fulfill the orders are not in place.
The initial purchase order is for six hundred MG80, MG125 and MG200 Mobile Generation systems. The MG systems will be integrated into the end customer’s choice of vehicles.
The order also includes an additional MG80 installed in a Ford F-450 with the 2,500 gallon per day mobile water desalinization option included.
KeyOptions
On May 30, 2019, the Company entered into a joint venture agreement (“JV”) with KeyOptions Pty Ltd., a privately held technology and security provider based in Victoria, Australia.
KeyOptions develops and markets products for governments, defense contractors and other commercial applications to counter security and cyber threats. The Company will provide a license for the JV to market and sell CoolTech’s entire product platform in Australia and neighboring countries in Southeast Asia.
New Strategic Alliance:
On December 16, 2019, the Company signed a cross marketing and licensing agreement with VerdeWatts, LLC., an energy generation and storage company encompassing everything from mobile solar power generation systems to large scale biogas turbine installations. Pursuant to the agreement VerdeWatts and the Company each granted the other a royalty free non-exclusive license to certain patents which license is subject to certain future negotiation.
Like CoolTech’s Mobile Generation systems (“MG”), VerdeWatts’ products are scalable and offer the ability to bring power nearly anywhere it is needed. Their proprietary Smart Solar Power Generation Units and energy storage systems combine to deliver sustainable power long after the sun has set.
24 |
|
Table of Contents |
The agreement with VerdeWatts also included a cross marketing and royalty free non-exclusive licensing agreement with FirmGreen, Inc., a water treatment facilities developer that works closely with VerdeWatts to create a suite of synergistic products that address significant needs in the global marketplace. FirmGreen specializes in water purification and desalination technologies. Their mobile, solar and container applications feature 6 levels of water purification for unrivaled drinkability. Pursuant to the agreement FirmGreen and the Company each granted the other a royalty free non-exclusive license to certain patents which license is subject to certain future negotiation.
CoolTech’s MG platform makes the companies’ product offering complete with mobile power generation. It provides the capability to power everything from irrigation for farms and water purification for rural areas to electric vehicle charging and fast charging in the urban ones.
Consider the solar-powered generator system with a built-in water purification unit that makes seawater desalination sustainable. The system pumps and purifies up to 3,000 gallons per day and interfaces with CoolTech’s MG system for 24-hour operation. The solar panels collapse and fold together, so the entire system fits easily in the bed of a work truck. It can be set up and operate anywhere a four-wheel drive vehicle can reach. All of these systems are patent protected and cross licensed to each of the three companies.
FirmGreen and VerdeWatts have a global presence with projects on 3 continents. The largest encompasses the installation of 14 natural gas generators to produce over 60 megawatts (MW) of power. The generators will be integrated with 50 megawatt hours of battery storage and another 6 MW of solar to ensure a consistent flow of power. VerdeWatts intend to replace most of the legacy on-site generators with CoolTech’s MG systems, however the Company has not received any orders and there cannot be any assurance that any orders will be placed.
Together the companies can create an energy or utility ecosystem that can enable less developed countries to leapfrog non-existent, inadequate or failing infrastructure to deliver reliable power and water quickly, sustainably and cost effectively to their citizens, agriculture and other businesses. The scale and impact can reach from the individual farms and villages to cities and regions.
In fact, by combining their respective technologies: energy generation, energy storage and load management controls into a single suite of products, the companies create what is called a “microgrid”. Varying combinations of energy sources such as solar, wind, biogas and MG systems both backup and supplement one another to provide consistent, uninterrupted primary power even during severe weather or other emergency situations.
The synergies between the companies extend beyond water purification and power generation. VerdeWatts’ wind and gas turbines and generators which produce electric power can all be improved by CoolTech’s thermal reduction technologies.
New Sales Agent:
In early December 2019, the Company entered into an agreement with Gaia Energy of Gdansk, Poland to act as an independent agent for the Company by developing markets in Eastern Europe, the Middle East and Africa. The agreement describes the agent’s duties as “generating revenue, and investment funding, for the Company from various organizations including investment funds, end-users, channel partners, integrators, and OEMs.”
Team members of Gaia Energy include executives with more than twenty-five years’ experience with Panasonic, Ford Motor Company, Electronic Data Systems and the US Air Force in the fields of advanced technologies and an African diplomat with a thirty-year background working with and for diplomatic missions, non-governmental organizations and international disasters and aid management services.
The diplomat introduced CoolTech products at a recent African technical summit attended by representatives from 54 countries.
Request for Collaboration Sent to US Government Officials
On December 11, 2019, letters signed by 13 government officials and Congressmen in Mexico were mailed to their counterparts in the US, specifically Governor Gavin Newsom, Secretary Rick Perry, Secretary Wilbur Ross, Senator Mitch McConnell and Speaker of the House Nancy Pelosi.
The letters were a request for collaborative support between the two countries to accelerate CoolTech’s product deployment into Mexico to help solve urgent rural power and water purification problems that are hurting rural communities. Those problems include irregular and faulty power in rural areas which hinders crop irrigation and water pollution which affects crops farmed for sale to the US.
25 |
|
Table of Contents |
The letters also detail the Mexican officials’ satisfaction with CoolTech’s solutions and management team and that they have met with the Company on several occasions for product demonstrations as well as strategic and technical advice. They highlight the benefits of CoolTech products, how they could quickly and efficiently address the problems noted, and how they expect them to become a viable part of the country’s infrastructure.
Export Import Bank of the United States
With the help of VerdeWatts and FirmGreen, CoolTech has initiated a relationship with the Export-Import Bank of the United States (EXIM), a U.S. government agency whose sole mission is to support U.S. exports. The bank fulfills its mission by offering very cost-effective financing for international customers and project developers to purchase U.S.-made services and purchase or lease U.S.-made goods.
To that end, the two companies applied to finance the Mexican projects referenced above. CoolTech also sent product information for due diligence review by the technical team at EXIM bank. Subsequently, CoolTech has received a Letter of Interest from EXIM, however, there cannot be any assurance that EXIM will provide any funding to the Company.
Results of Operations
The following table sets forth, for the periods indicated, condensed consolidated statements of operations data. The table and the discussion below should be read in conjunction with the accompanying condensed consolidated financial statements and the notes thereto, appearing elsewhere in this report.
|
|
Three months ended June 30, |
|
|
|
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
Change |
|
|
% |
|
||||
Revenues |
|
$ | -- |
|
|
$ | -- |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll and related expenses |
|
|
83,408 |
|
|
|
136,794 |
|
|
|
(53,386 | ) |
|
|
-39.0 | % |
Consulting |
|
|
51,000 |
|
|
|
83,383 |
|
|
|
(32,383 | ) |
|
|
-38.8 | % |
Professional fees |
|
|
52,309 |
|
|
|
44,704 |
|
|
|
7,605 |
|
|
|
17.0 | % |
Research and development |
|
|
-- |
|
|
|
32,402 |
|
|
|
(32,402 | ) |
|
|
-100.0 | % |
General and administrative |
|
|
3,544 |
|
|
|
63,832 |
|
|
|
(60,288 | ) |
|
|
-94.4 | % |
Total operating expenses |
|
|
190,261 |
|
|
|
361,115 |
|
|
|
(170,854 | ) |
|
|
-47.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(522,192 | ) |
|
|
(450,212 | ) |
|
|
(71,980 | ) |
|
|
-16.0 | % |
Change in fair value of derivative liability |
|
|
64,103 |
|
|
|
(526,802 | ) |
|
|
590,905 |
|
|
|
112.2 | % |
(Loss), gain on extinguishment of debt |
|
|
-- |
|
|
|
(25,860 | ) |
|
|
25,860 |
|
|
|
100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(648,350 | ) |
|
|
(1,363,989 | ) |
|
|
715,639 |
|
|
|
52.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Noncontrolling interest |
|
|
7 |
|
|
|
(812 | ) |
|
|
819 |
|
|
|
100.9 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss to shareholders |
|
$ | (648,343 | ) |
|
$ | (1,363,177 | ) |
|
$ | 714,834 |
|
|
-52.4. |
% |
26 |
|
Table of Contents |
|
|
Six months ended June 30, |
|
|
|
|||||||||||
|
|
2020 |
|
|
2019 |
|
|
Change |
|
|
% |
|
||||
Revenues |
|
$ | -- |
|
|
$ | -- |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll and related expenses |
|
|
166,158 |
|
|
|
263,254 |
|
|
|
(97,096 | ) |
|
|
-36.9 | % |
Consulting |
|
|
113,000 |
|
|
|
178,707 |
|
|
|
(65,707 | ) |
|
|
-36.8 | % |
Professional fees |
|
|
99,109 |
|
|
|
126,469 |
|
|
|
(27,360 | ) |
|
|
-21.6 | % |
Research and development |
|
|
10,308 |
|
|
|
47,102 |
|
|
|
(36,794 | ) |
|
|
-78.1 | % |
General and administrative |
|
|
13,350 |
|
|
|
149,698 |
|
|
|
(136,348 | ) |
|
|
-91.1 | % |
Total operating expenses |
|
|
401,925 |
|
|
|
765,230 |
|
|
|
(363,305 | ) |
|
|
-47.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(889,503 | ) |
|
|
(1,070,186 | ) |
|
|
180,683 |
|
|
|
16.9 | % |
Change in fair value of derivative liability |
|
|
(173,865 | ) |
|
|
(568,620 | ) |
|
|
(394,755 | ) |
|
|
-69.4 | % |
Gain on extinguishment of debt |
|
|
-- |
|
|
|
208,325 |
|
|
|
(208,325 | ) |
|
|
-100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(1,465,293 | ) |
|
|
(2,195,711 | ) |
|
|
730,418 |
|
|
|
33.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Noncontrolling interest |
|
|
525 |
|
|
|
(1,282 | ) |
|
|
757 |
|
|
|
59.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss to shareholders |
|
$ | (1,464,768 | ) |
|
$ | (2,194,429 | ) |
|
$ | 729,661 |
|
|
|
33.3 | % |
Revenues
During the three and six months ended June 30, 2020, and since inception, the Company has not generated any revenues. Cool Technologies generated its first Mobile Generation order during the quarter ended June 30, 2014 and received a partial deposit in advance of completing the sale with companies controlled by the individual who is a 5% owner of UPT and a shareholder of the Company. The order is in the production queue along with other existing orders.
Operating Expenses
Payroll and related expenses decreased during the three months ended June 30 from $136,794 in 2019 to $83,408 in 2020 and during the six months ended June 30 from $263,254 in 2019 to $166,158 in 2020 due to the elimination of Mark Hodowanec’s salary after he resigned in July 2019 and due to the fact that the remaining officers received no salary during the first quarter and only one month’s salary in the second quarter.
Consulting expenses decreased during the three months ended June 30 from $83,383 in 2019 to $51,000 in 2020 and during the six months ended June 30 from $178,707 in 2019 to $113,000 in 2020. This was due primarily to the reduced workload and payments for related-party consultants and general consultants. In both cases the decreases reflected the Company’s need to conserve cash.
Professional fees increased during the three months ended June 30 from $44,704 in 2019 to $52,309 in 2020 and decreased during the six months ended June 30 from $126,469 in 2019 to $99,109 in 2020. The increase in professional fees during the three months ended June 30 was due primarily to fees to retain legal representation to defend the Company against the eviction complaint. The decrease in professional fees during the six months was due primarily to the reduced requirements for accounting and legal and the need to conserve cash.
Research and development expenses decreased during the three months ended June 30 from $32,402 in 2019 to $0 in 2020 due to the completion of the design of the MG system and the Company’s focus on its commercialization. During the six months ended June 30, research and development expenses decreased from $47,102 in 2019 to $10,308 in 2020 due again to the Company moving from the development of its products to the commercialization of its products.
General and administrative expenses decreased during the three months ended June 30 from $63,832 in 2019 to $3,544 in 2020 due to limited funds. During the six months ended June 30, general and administrative expense decreased from $149,698 in 2019 to $13,350 in 2020 also due to limited funds.
27 |
|
Table of Contents |
Other Income and Expense
Interest expense increased during the three months ended June 30 from $450,212 in 2019 to $522,192 in 2020 due to a number of vendors adding previously unrecognized interest to their bills. Interest expense decreased during the six months ended June 30 from $1,070,186 in 2019 to $889,503 in 2020 primarily due accelerated debt discount amortization upon the conversion of convertible notes.
Net Loss and Noncontrolling interest
Since Cool Technologies has incurred losses since inception, it has not recorded any income tax expense or benefit. Accordingly, the Company’s net loss is driven by operating and other expenses. Noncontrolling interest represents the 5% third-party ownership in UPT, which is subtracted to calculate net loss to shareholders.
Liquidity and Capital Resources
The Company has historically met its liquidity requirements primarily through the public sale and private placement of equity securities, debt financing, and exchanging common stock warrants and options for professional and consulting services. On June 30, 2020, CoolTech had cash of $3.
Working capital is the amount by which current assets exceed current liabilities. The Company had negative working capital of $6,958,960 and $6,821,643, respectively, on June 30, 2020 and December 31, 2019. The decrease in working capital was due to the large reduction in cash combined with increases in accounts payable and accrued liabilities – related party that more than offset a small increase in the value of the inventory and reductions in derivative liability and current debt. To that end, the Company owes approximately $493,152 for convertible notes and it owes another $2,550,000 in notes payable. Based on its current forecast and budget, management believes that its cash resources will not be sufficient to fund its operations through the end of the third quarter. Unless the Company can generate sufficient revenue from the execution of the Company’s business plan, it will need to obtain additional capital to continue to fund the Company’s operations. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable. If the Company is unable to obtain sufficient funds, it may be forced to curtail and/or cease operations.
May Convertible Note -- On May 13, 2019, the Company entered into a convertible note agreement. It received $150,000 after an original issue discount of $15,000 in lieu of interest, for a total amount of $165,000 due on December 13, 2019. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the outstanding balance will increase by 25% and a daily penalty of $100 will accrue until the default is remedied.
The note also included a clause which stated that if the effective conversion price is less than $0.01 at any time, the principal amount of the note shall increase by $10,000 and that the conversion price will be permanently redefined to equal 40% of the lowest traded price that occurred during the 15 consecutive trading days immediately preceding the date on which the note holder elects to convert all or part of the note. On December 20, 2019, the effective conversion price reached sub-penny threshold. The principal amount and the subsequent conversion price were adjusted as noted above. Therefore, as of December 31, 2019, the convertible balance remaining totaled $179,950.
On January 7, 2020, Cool Technologies issued 5,000,000 shares of common stock to LGH Investments, LLC upon partial conversion of $17,920 on convertible debt of $179,950. On January 21, 2020, Cool Technologies issued 10,000,000 shares of common stock to LGH Investments, LLC upon partial conversion of $22,400 on convertible debt of $179,950. On February 24, 2020, Cool Technologies issued 15,000,000 shares of common stock to LGH Investments, LLC upon partial conversion of $17,400 on convertible debt of $179,630. On March 5, 2020, Cool Technologies issued 6,500,000 shares of common stock to LGH Investments, LLC upon partial conversion of $8,840 on convertible debt of $179,630. On March 24, 2020, Cool Technologies issued 8,500,000 shares of common stock to LGH Investments, LLC upon partial conversion of $23,120 on convertible debt of $179,950. As of June 30, 2020, the convertible balance remaining totaled approximately $21,270.
28 |
|
Table of Contents |
June Convertible Note -- On June 6, 2019, the Company entered into a convertible note agreement. It received $130,000 with an original issue discount of $13,000 and an annual interest rate of 8%. The principal ($143,000) and interest will be due on June 6, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 24% per annum, require the Company to pay the product of the then outstanding principal amount, plus accrued interest and default interest, divided by the conversion price multiplied by the highest price at which the common stock traded at any time between the issuance date and the date of the event of default.
On December 19, 2019, Cool Technologies issued 1,128,687 shares of common stock to the holder upon partial conversion of $10,418 in debt. On December 24, 2019, the Company issued 2,674,064 shares of common stock to the holder upon partial conversion of $20,884 in debt.
On January 13, 2020, Cool Technologies issued 4,220,881 shares of common stock to Eagle Equities, LLC upon partial conversion of $20,978 on convertible debt of $143,300. On January 28, 2020, Cool Technologies issued 6,173,709 shares of common stock to Eagles Equities, LLC upon partial conversion of $21,040 on convertible debt of $143,300. On February 3, 2020, Cool Technologies issued 9,573,426 shares of common stock to Eagle Equities, LLC upon partial conversion of $21,071 on convertible debt of $143,300. On February 13, 2020, Cool Technologies issued 11,992,022 shares of common stock to Eagle Equities, LLC upon partial conversion of $26,394 on convertible debt of $143,300. On March 2, 2020, Cool Technologies issued 9,820,030 shares of common stock to Eagle Equities, LLC upon partial conversion of $26,494 on convertible debt of $143,300. As of June 30, 2020, the balance remaining totals approximately $2,000.
July Convertible Note – On July 3, 2019, the Company entered into a convertible note agreement. It received $150,000 with an original issue discount of $15,300 in lieu of interest, for a total amount of $168,300 plus 8% annual interest due on July 3, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of CoolTech’s common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 22% per annum, require the Company to redeem all or any portion of the note at a premium of 150%.
On January 3, 2020, Cool Technologies issued 2,238,806 shares of common stock to PowerUp Lending Group Ltd. upon partial conversion of $15,000 on convertible debt of $168,300. On January 8, 2020, Cool Technologies issued 3,174,603 shares of common stock to PowerUp Lending Group Ltd. upon partial conversion of $20,000 on convertible debt of $168,300. On January 14, 2020, Cool Technologies issued 3,921,569 shares of common stock to PowerUp Lending Group, Ltd. upon partial conversion of $20,000 on convertible debt of $168,300. On January 16, 2020, Cool Technologies issued 4,444,444 shares of common stock to PowerUp Lending Group, Ltd. upon partial conversion of $20,000 on convertible debt of $168,300. On January 21, 2020, Cool Technologies issued 5,111,111 shares of common stock to PowerUp Lending Group, Ltd. upon partial conversion of $23,000 on convertible debt of $168,300. On January 30, 2020, Cool Technologies issued 7,142,857 shares of common stock to PowerUp Lending Group, Ltd. upon partial conversion of $20,000 on convertible debt of $168,300. On February 3, 2020, Cool Technologies wired $72,000 to PowerUp Lending Group, Ltd. and the note was retired.
August Convertible Note -- On August 28, 2019, the Company entered into a convertible note agreement. It received $115,000 with an original issue discount of $11,500 and an annual interest rate of 8%. The principal ($126,500) and interest will be due on August 28, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 24% per annum or the highest rate of interest permitted by law.
On March 10, 2020, Cool Technologies issued 10,282,003 shares of common stock to Eagle Equities, LLC upon partial conversion of $40,151 on convertible debt of $126,500. On May 5, 2020, the Company issued 4,460,094 shares of common stock upon partial conversion of $31,667. On June 5, 2020, the Company issued 3,325,335 shares of common stock upon partial conversion of $25,000. On June 15, 2020, the Company issued 3,924,883 shares of common stock upon partial conversion $23,408. On June 30, 2020, the Company issued 2,067,880 shares of common stock upon final conversion of $11,746 and the note was retired.
29 |
|
Table of Contents |
October Convertible Note -- On October 3, 2019, the Company entered into a convertible note agreement. It issued 350,000 inducement shares of restricted common stock and received $115,000 with an original issue discount of $11,500 and an annual interest rate of 8%. The principal ($126,500) and interest will be due on October 2, 2020. After 180 days, at the holder’s option, a portion or all the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest closing price during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 24% per annum or the highest rate of interest permitted by law. As of June 30, 2020, the remaining balance totaled approximately $126,500.
November Convertible Note -- On November 9, 2019, the Company entered into a convertible note agreement. It received $126,000 with an original issue discount of $13,000 and an annual interest rate of 8%. The principal ($141,000) and interest will be due on November 6, 2020. After 180 days, at the holder’s option, a portion or all the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest closing price during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 24% per annum or the highest rate of interest permitted by law. On May 8, 2020, Cool Technologies issued 2,352,941 shares of common stock upon partial conversion of $20,000. On May 14, 2020, the noteholder sold the convertible note to LGH Investments, LLC for $162,700. All terms and conditions remained the same. As of June 30, 2020, the remaining balance totaled approximately $162,700.
December Convertible Note -- On December 5, 2019, the Company entered into a convertible note agreement. It received $103,000 with an original issue discount of $6,000 and an annual interest rate of 8%. The principal ($109,000) and interest will be due on December 5, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest Volume Weighted Average Price (VWAP) during the 10 trading days preceding the conversion date. In the event of default, the interest rate will be 18% per annum or the highest rate of interest permitted by law. On May 6, 2020, the noteholder sold the convertible note to LGH Investments, LLC for $144,313. All terms and conditions remained the same. As of June 30, 2020, the remaining balance totaled approximately $144,313.
January Convertible Note -- On January 30, 2020, the Company entered into a convertible note agreement with an accredited investor. It received $36,000 after an original issue discount of $4,000 in lieu of interest, for a total amount of $40,000 due on July 30, 2020. After 180 days, at the holder’s option, a portion or all of the unpaid principal and interest may be converted into shares of common stock at a 29% discount to the lowest VWAP during the 10 trading days preceding the conversion date. In the event of default, the outstanding balance will increase by 25% and a daily penalty of $100 will accrue until the default is remedied. As of June 30, 2020, the remaining balance totaled $40,000.
Off Balance Sheet Arrangements
Currently, the Company has no off-balance sheet arrangements.
Cash Flows
Cash flows from operating, investing and financing activities were as follows:
|
|
Six months ended June 30, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Net cash from operating activities |
|
$ | (162,713 | ) |
|
$ | (756,448 | ) |
Net cash from investing activities |
|
|
(7,747 | ) |
|
|
(4,261 | ) |
Net cash from financing activities |
|
|
155,157 |
|
|
|
748,039 |
|
Net cash from operating activities decreased due to reductions in net loss, change in fair value and derivative liability, amortization of debt discount, and inventory as well as the elimination of the gain on extinguishment of debt. Together they combined to overwhelm the comparatively minor increases in prepaid assets, accounts payable and accrued liabilities – related party. Cash provided by financing activities included debt borrowings of $157,000 during 2020 which was a significant reduction from the debt borrowings of $1,220,345 during the first half of 2019. Payments on debt during the first six months of 2020 consisted of $1,843 which was used to pay off the holder of a convertible note.
The Company's capital requirements for the next 12 months will consist of $3.4 million with anticipated expenses of $1.4 million for salaries, public company filings, and consultants and professional fees. An additional $2.0 million in working capital is expected to be needed for inventory and related costs for production of the mobile power generation systems as well as development and commercialization of the thermal dispersion technology applications.
30 |
|
Table of Contents |
Management believes the Company's funds are insufficient to provide for its projected needs for operations for the next 12 months. The Company is currently negotiating additional non-dilutive funding to support product development or for other purposes. In the event that the negotiations fail, the Company may have to rely on equity or debt financing that may involve substantial dilution to our then existing stockholders. If it is unable to close additional equity financing, the Company may have to cease operations.
Going Concern
The Company has incurred net losses of $54,572,208 since inception and have not fully commenced operations, raising substantial doubt about its ability to continue as a going concern. Management believes that the Company’s ability to continue as a going concern is dependent on its ability to raise capital, generate revenue, achieve profitable operations and repay its obligations when they come due. As of June 30, 2020, the Company has $3 in cash and it owes $493,152 and $2,550,000 for convertible and promissory notes, respectively. The Company is pursuing various financing alternatives to address the payment of outstanding debt and to support the sales, component acquisition and assembly of our mobile power generation systems as well as the completion of the secondary elements of our business plan: to license its thermal technologies and applications, including submersible dry-pit applications. There can be no assurance, however, that the Company will obtain adequate funding or that it will be successful in accomplishing any of our objectives. Consequently, the Company may not be able to continue as an operating company.
Critical Accounting Estimates
The condensed consolidated financial statements and the accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, and expenses. Cool Technologies continually evaluates the accounting policies and estimates used to prepare the condensed consolidated financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to the results of operations and financial position are discussed in the Annual Report on Form 10-K for the year ended December 31, 2019 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, Cool Technologies is not required to provide the information required by this Item.
Item 4. Controls and Procedures
Management does not expect that its internal controls over financial reporting will prevent all errors and all fraud. Control systems, no matter how well conceived and managed, can provide only reasonable assurance that the objectives of the control system are met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
31 |
|
Table of Contents |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including the principal executive officer and principal financial officer, as of June 30, 2020, Cool Technologies conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the principal executive officer and principal financial officer have concluded that, based on the material weaknesses discussed below, the disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by the Company in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Act Commission’s rules and forms and that its disclosure controls are not effectively designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Cool Technologies internal controls are not effective for the following reasons, (1) there are no entity level controls, because of the limited time and abilities of the Company’s three officers, (2) there is no separate audit committee, and (3) CoolTech has not implemented adequate system and manual controls. As a result, the Company’s internal controls have inherent weaknesses, which may increase the risks of errors in financial reporting under current operations and accordingly are not effective as evaluated against the criteria set forth in the Internal Control – Integrated Framework issued by the committee of Sponsoring Organizations of the Treadway Commission (1992 version). Based on the evaluation, management concluded that the Company’s internal controls over financial reporting were not effective as of June 30, 2020.
Even though there are inherent weaknesses, management has taken steps to minimize the risk. The Company uses a third-party consultant to review transactions for appropriate technical accounting, reconcile accounts, review significant transactions and prepare financial statements. Invoices and other bookkeeping matters are reviewed by a third party
Certified Fraud Examiner. Any deviation or errors are reported to management.
Cool Technologies can provide no assurance that its internal controls over financial reporting will be compliant in the near future. As revenues permit, the Company will enhance its internal controls through additional software and other means. If and when it becomes a listed company under SEC rules, the Company will create an audit committee comprised of independent directors.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to affect, the internal control over financial reporting.
32 |
|
Table of Contents |
Securities and Exchange Commission Settlement
On September 20, 2018, the Securities and Exchange Commission (SEC) approved an offer to settle the enforcement proceedings against the Company pursuant to Section 21C of the Securities Exchange Act of 1934.
These proceedings arose out of the violation of the Regulation S-X requirement that interim financial statements filed as part of a Form 10-Q be reviewed by an independent public accounting firm prior to filing.
On three occasions, specifically, May 20, 2013, August 19, 2013 and August 22, 2016, Cool Technologies filed Form 10-Qs that contained financial statements that were not reviewed by an independent public accounting firm. In two cases, the Company properly disclosed that the 10Q’s were “unaudited and unreviewed” as set forth by the guidance in the Division of Corporation Finance Financial Reporting Manual Section 4410.3. And in each case, the Company subsequently filed a restated and amended Form 10-Q/A that complied with the Interim Review Requirement. In no instance were the filings ever subjected to audit challenge.
Pursuant to the enforcement proceeding instituted by the SEC, the Company settled for a fine of $75,000 and agreed to cease and desist from any future violations of Sections 13(a) of the Exchange Act and Rule 13a-13 thereunder, and Rule 8-03 of Regulation S-X. As of the date of this filing, the Company still owes the SEC $50,000.
On June 26, 2020, an eviction complaint was filed by Dennis Campbell and PGC Investments, LLC in the Sixth Judicial Circuit of Pinellas County, Florida.
The history of the complaint dates back to May 1. 2014. On that date Cool Technologies entered a lease agreement with Dennis Campbell for a property located in Largo, Florida. The lease agreement commenced on July 1, 2014 and expired on June 30, 2017.
On July 1, 2014, the Company entered into a 36-month independent contractor agreement with PGC Investments LLC, to provide the full-time services of Dennis Campbell to manage the day-to-day operations of Ultimate Power Truck (‘UPT”). Consequently, he was both the landlord of and the company manager for UPT.
Mr. Campbell claims he is still owed $79,929 plus late fees, interest and penalties. Whereas, the Company claims it has made all required payments under the lease.
Various motions have been filed. No court date has been set.
From time to time, the Company may be a party to other legal proceedings. Management currently believes that the ultimate resolution of these other matters, if any, and after consideration of amounts accrued, will not have a material adverse effect on our consolidated results of operations, financial position, or cash flow.
As a smaller reporting company, Cool Tech is not required to provide the information required by this Item.
33 |
|
Table of Contents |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering.
None of the above issuances involved any underwriters, underwriting discounts or commissions, or any public offering and we believe we are exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder.
Item 3. Defaults Upon Senior Securities
On March 19, 2020, on a note payable. The $250,000 note was purchased on March 18, 2019 by an accredited investor. In return, the Company promised to pay the principal amount together with simple interest of 15% per annum on or before the one-year anniversary. As of the filing date, the Company has not received a notice of default for the note. As per the terms of the note, interest will continue to accrue at 15% per annum until paid in full.
On May 1, 2020, the Company defaulted on 2 notes payable. A $250,000 note was purchased on September 11, 2018 and a $125,000 note was purchased on September 25, 2018 by the same accredited investor. In return, the Company promised to pay the principal amount together with simple interest of 15% per annum on or before the one-year anniversaries. On March 16, 2020, the investor signed an amendment to the agreement extending the maturity dates until April 30, 2020. As of the filing date, the company has not received a notice of default. As per the terms of the note, interest will continue to accrue at 15% per annum until paid in full.
On May 26, 2020, the Company defaulted on a Promissory Note Agreement. A $250,000 note was purchased on October 26, 2018 by an accredited investor. It received $250,000 in financing and promised to pay the principal amount together with simple interest of 15% per annum on or before the one-year anniversary. On October 26, 2019, the investor signed an amendment to the agreement extending the maturity date for seven months. As of the filing date, the Company has not received a notice of default for either note. As per the terms of the note, interest will continue to accrue at 15% per annum until paid in full.
On July 29, 2020, the Company defaulted on a Promissory Note Agreement. An $85,000 note was purchased on June 29, 2020 by an accredited investor. The Company received $85,000 in financing and promised to pay the principal amount together with interest of $10,000 by July 29, 2020. In the event of a default, the investor may upon written notice to the company, declare all unpaid principal and interest immediately due and payable. As of the filing date, the Company has not received a notice of default.
On July 30, 2020, the Company defaulted on a Promissory Note Agreement. A $40,000 note was purchased on January 30, 2020 by an accredited investor. The Company received $36,000 after an original issue discount of $4,000 in lieu of interest, for a total amount of $40,000 due on July 30, 2020. In the event of default, the outstanding balance will increase by 25% and a daily penalty of $100 will accrue until the default is remedied. As of the filing date, the Company has not received a notice of default.
On August 3, 2020, the Company defaulted on a Promissory Note Agreement. An $85,000 note was purchased on July 3, 2020 by an accredited investor. The Company received $85,000 after an original issue discount of $8,500 in lieu of interest. The total amount of $93,500 was due on August 3, 2020. In the event of default, the outstanding balance will accrue interest of either 18% or the maximum rate permitted by law until the default is remedied. As of the filing date, the Company has not received a notice of default.
Item 4. Mine Safety Disclosures
Not applicable.
The occurrence of an uncontrollable event such as the COVID19 pandemic has negatively affected our operations. A pandemic typically results in social distancing, travel bans and quarantine. This has limited access to our facilities, customers, management, support staff and professional advisors. These, in turn, have impacted our operations and financial condition. It may also impact demand for our products and may continue to hamper our efforts to provide our investors with timely information and comply with our filing obligations with the Securities and Exchange Commission.
As of the filing date, it is uncertain whether COVID-19 will have a significant impact on production and distribution of Company products.
34 |
|
Table of Contents |
*Filed Herewith
35 |
|
Table of Contents |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Cool Technologies, Inc. |
|
|
|
|
|
|
Dated: October 5, 2020 |
|
/s/ Timothy Hassett |
|
|
By: |
Timothy Hassett |
|
|
Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
|
|
Dated: October 5, 2020 |
|
/s/ Quentin Ponder |
|
|
By: |
Quentin Ponder |
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|
36 |
EXHIBIT 4.34
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS OR THE AVAILABLILITY OF A VALID EXEMPTION FROM THE REGISTRATION PROVISIONS THEREOF IN RESPECT OF SUCH TRANSFERS OR ASSIGNMENT.
PROMISSORY NOTE
Principal Amount: $85,000 |
|
Purchase Price: $85,000 |
Issue Date: June 29, 2020 |
FOR VALUE RECEIVED, the undersigned, COOL TECHNOLOGIES, Inc., a corporation registered in the state of Nevada (“Borrower”), having a principal place of business at 8875 Hidden River Parkway, Suite 300, Tampa, FL 33637 hereby promises to pay to the order of Steve Schaner (“Lender”), a resident of California and having a principal residence at Orange, California, the Principal Amount of Eighty Five Thousand Dollars ($85,000.00), together with interest in the amount of $10,000 for total payment of Ninety Five Thousand Dollars ($95,000.00). The entire unpaid principal and interest will be paid in full on or before July 29, 2020.
1. Issued Warrant Shares. The Borrower hereby further agrees that on the date of execution of this Note, the Borrower will grant the Lender and the Lender shall be entitled to additional compensation in the amount of One Million Warrant Shares providing the Lender to acquire common stock of Cool Technologies, Inc. pursuant to the terms identified in the Form Warrant document of Exhibit “A”. The Warrant Shares and corresponding Issued Shares upon exercise shall be subject to the following:
(a) The Warrant Shares, when exercised and issued, will represent validly authorized, duly issued, and fully paid and nonassessable shares of the Borrower, and the issuance thereof will not conflict with the Articles of Incorporation or Bylaws of the Borrower or with any outstanding warrant, option, call, preemptive right, or commitment of any type relating to the Borrower's capital stock.
(b) The Lender acknowledges and agrees that, until such time as the relevant Issued Shares have been registered under the Securities Act, the certificates and other instruments representing any of the issued shares derived from the Warrant Shares shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Issued Shares):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
1 |
|
(c) With a view to making available to the Lender the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the Securities Exchange Commission (the "SEC") that may at any time permit the Lender to sell the Issued Shares to the public without registration (collectively, "Rule 144"), the Borrower agrees to:
(i) make and keep public information available, as those terms are understood and defined in Rule 144;
(ii) except as otherwise previously disclosed to the Lender, file with the SEC in a timely manner all reports and other documents required of the Borrower under the Securities Act and the Securities Exchange Act of 1934 (the "1934 Act"); and
(iii) at the request of the Lender, the Borrower shall give its transfer agent instructions (supported by an opinion of the Borrower counsel, if required or requested by the transfer agent) to the effect that, upon the transfer agent's receipt from the Lender of (i) a certificate (a "Rule 144 Certificate") certifying (A) that the Lender’s holding period (as determined in accordance with the provisions of Rule 144) for the Issued Shares which the Lender proposes to sell (the "Shares Being Sold") is not less than six months, and (B) as to such other matters as may be appropriate in accordance with Rule 144 under the Securities Act; and, (ii) an opinion of counsel acceptable to the Borrower that, based on the Rule 144 Certificate, the Shares Being Sold may be sold pursuant to the provisions of Rule 144, even in the absence of an effective registration statement, then the Transfer Agent is to effect the transfer of the Shares Being Sold and issue to the buyer(s) or transferee(s) thereof one or more stock certificates representing the transferred Shares Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the transfer agent's books and records (except to the extent any such legend or restriction results from facts other than the identity of the relevant Lender, as the seller or transferor thereof, or the status, including any relevant legends or restrictions, of the shares of the Shares Being Sold while held by the Lender). If the Borrower's transfer agent reasonably requires any additional documentation at the time of the transfer, the Borrower shall deliver or cause to be delivered all such reasonable additional documentation as may be necessary to effectuate the issuance of an unlegended certificate.
2. Borrower may, at any time, pre-pay this Note, in whole or in part, with such prepayment to be credited entirely to a reduction in Principal Amount and accrued interest of this Note.
3. Event of Default. The occurrence and continuance of any of the following shall constitute an “Event of Default” under this Note:
(a) Failure to Pay. Borrower shall fail to pay when due, whether at stated maturity, upon acceleration or otherwise, any principal or interest payment, or any other payment required under the terms of this Note on the date due.
(b) Voluntary Bankruptcy or Insolvency Proceedings. Borrower shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, or (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it.
2 |
|
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator, or custodian of Borrower or of all or a substantial part of its property, or an involuntary case or other proceedings seeking liquidation, reorganization, or other relief with respect to Borrower or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within sixty (60) days of commencement.
(d) Government Action. If any governmental or regulatory authority takes or institutes any action that will materially affect Borrower’s financial condition, operations or ability to pay or perform Borrower’s obligations under this Note.
(e) Judgment. A judgment or judgments for the payment of money in excess of the sum of $1,000,000.00 in the aggregate shall be rendered against Borrower and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid or undischarged for more than sixty (60) days from the date of entry thereof or such longer period during which execution of such judgment shall be stayed during an appeal from such judgment.
(f) Attachment. Any execution or attachment shall be issued whereby any substantial part of the property of Borrower shall be taken or attempted to be taken and the same shall not have been vacated or stayed within thirty (30) days after the issuance thereof.
4. Acceleration Remedies. At any time following the occurrence of an Event of Default (other than an Event of Default referred to herein, Lender may, by written notice to Borrower, declare all unpaid principal, plus all accrued interest and other amounts due hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding. Upon the occurrence or existence of any Event of Default described herein, immediately and without notice, all outstanding unpaid principal, plus all accrued interest and other amounts due hereunder shall automatically become immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, Lender may exercise any other right, power or remedy permitted to it by law, either by suit in equity or by action at law, or both.
5. This Note may not be changed orally, but only by an agreement in writing and signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
6. This Note shall be construed and enforced in accordance with the laws of the State of Nevada and shall be binding upon the successors and assigns of Borrower and inure to the benefit of Lender, its successors, endorsees, and assigns.
3 |
|
AT THE OPTION OF THE LENDER, THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR NEVADA STATE COURT SITTING IN STATE OF NEVADA; AND THE BORROWER CONSENTS TO THE EXCLUSSIVE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY LEGAL THEORY BASED ON, ARISING FROM, OR RELATED TO THIS NOTE AND ANY OTHER DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE- DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
THE BORROWER AND THE LENDER EACH IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BASED ON, ARISING FROM, OR RELATED TO THIS NOTE AND ANY OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
|
/s/ Timothy Hassett |
|
|
On behalf of Cool Technologies, Inc. |
|
|
|
|
|
Timothy Hassett |
|
|
Print Name |
|
|
|
|
|
Chief Executive Officer |
|
|
Title |
|
4 |
EXHIBIT 4.35
0% OID PROMISSORY NOTE
Principal Amount $93,500.00 Purchase Price $85,000.00 |
Scottsdale, Arizona July 3, 2020 |
FOR VALUE RECEIVED, the undersigned, Cool Technologies Inc, a corporation registered in the state of Nevada (“Borrower”) having a principal place of business at 8875 Hidden River Parkway, Suite 300, Tampa, FL, 33637 hereby promises to pay to the order of 3&1 Capital Partners LLC, a limited liability company registered in the state of Minnesota having a principal place of business at 16211 N Scottsdale Rd, Suite A6A-266, Scottsdale, AZ 85254 (“Lender”), the Principal Amount of Ninety-Three Thousand Five Hundred Dollars ($93,500.00). The purchase price for this Note shall be $85,000.00 (the “Purchase Price”), computed as follows: $93,500.00 original principal balance, less the OID of $8,500.
1. |
The Note shall have an interest rate of zero percent (0%) annually. However, upon the occurrence of an Event of Default (as defined below), the Outstanding Balance of this Note shall bear interest at the lesser of the rate of eighteen percent (18%) per annum or the maximum rate permitted by applicable law, compounding daily and calculated on the basis of a 360-day year, from the date the applicable Event of Default occurred until paid. |
|
|
2. |
Borrower promises to pay the Principal Amount of $93,500.00 to Lender on or before the 30th day of from the document date, when the entire unpaid principal shall be due and payable in full. Payments or other credits are posted to the account when made or received. Payments are not credited until received. Payments received after 5:00 p.m. on any day may be considered as payment on the following business day. |
|
|
3. |
Borrower may, at any time, pre-pay this Note, in whole or in part, with such prepayment to a reduction in principal of this Note. |
|
|
4. |
Upon the occurrence of a default in the obligations under this Note, the Lender of this Note shall have the option without notice of declaring the principal balance hereof and the interest accrued thereunder immediately due and payable. |
|
|
5. |
This Note is unsecured. |
|
|
6. |
Should the indebtedness represented by this Note not be paid at maturity or any part thereof be collected at law or in equity or through any bankruptcy (including without limitation any action for relief from the automatic stay, or any bankruptcy proceeding whether or not Lender prevails therein) receivership, probate or other court proceedings or by any judicial or non-judicial foreclosure proceeding or if this Note is placed in the hands of attorneys for collection after default, the Borrower or successors and assigns of this Note jointly and severally agree to pay on demand, in addition to the principal and fee due and payable hereon, reasonable attorneys’ fees and collection costs and expenses. |
|
|
7. |
Borrower and any and all guarantors and sureties, or successors and assigns, of this Note and all other persons liable or to become liable on this Note severally waive presentment for payment, demand, notice of demand and of dishonor and nonpayment of this Note, notice of intention to accelerate the maturity of this Note, protest and notice of protest, diligence in collecting and bringing of suit against any other party and agree to all renewals, extensions, modifications, partial payments, releases or substitutions of security in whole or in part, with or without notice before or after maturity. The pleading of any statute of limitations as a defense to any demand against the makers, guarantors and sureties is expressly waived by each and all such parties to the extent permitted by law. |
1 |
|
8. |
This Note may not be changed orally, but only by an agreement in writing and signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. |
|
|
9. |
This Note shall be construed and enforced in accordance with the laws of the State of Arizona and shall be binding upon the successors and assigns of Borrower and inure to the benefit of Lender, its successors, endorsees, and assigns. |
AT THE OPTION OF THE LENDER, THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR ARIZONA STATE COURT SITTING IN MARICOPA, ARIZONA; AND THE BORROWER CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY LEGAL THEORY BASED ON, ARISING FROM, OR RELATED TO THIS NOTE AND ANY OTHER DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
THE BORROWER AND THE LENDER EACH IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BASED ON, ARISING FROM, OR RELATED TO THIS NOTE AND ANY OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
/s/ Tim Hassett |
7/3/2020 |
|
|
Authorized Signatory |
Date |
|
|
Cool Technologies Inc |
|
|
|
|
|
|
|
/s/ Brian Mosbey |
7/3/2020 |
|
|
Authorized Signatory |
Date |
|
|
3&1 Capital Partners LLC |
|
|
|
2 |
EXHIBIT 4.36
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of September 15, 2020, is entered into by and between COOL TECHNOLOGIES, INC., a Nevada corporation, (the “Company”), and LGH INVESTMENTS, LLC, a Wyoming limited liability company (the “Buyer”).
A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”).
B. Upon the terms and conditions stated in this Agreement, the Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement (i) a Convertible Promissory Note of the Company, in the form attached hereto as Exhibit A (the “Note”), in the original principal amount of $66,000.00 (the “Original Principal Amount”) (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”) and (ii) one million (1,000,000) restricted common shares in the Company (“Inducement Shares”) to be delivered to Buyer, via overnight courier within 7 (seven) calendar days following the Closing Date.
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. Purchase and Sale. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company (i) the Note in the original principal amount of $66,000, and (ii) one million Inducement Shares.
1.1. Form of Payment. On the Closing Date, (i) the Buyer shall pay the purchase price of $60,000 (the “Purchase Price”) for the Securities to be issued and sold to it at the Closing (as defined below) by wire transfer of immediately available funds to a Company account designated by the Company, in accordance with the Company’s written wiring instructions, against delivery of the Securities, and (ii) the Company shall deliver such duly executed Securities on behalf of the Company, to the Buyer, against delivery of such Purchase Price.
1.2. Closing Date. The date and time of the issuance and sale of the Securities pursuant to this Agreement (the “Closing Date”) shall be on or about September 15, 2020, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.
1.3. Share Reservation. The Company shall at all times require its transfer agent to establish a reserve of shares of its authorized but unissued and unreserved Common Stock in the amount of at least 10,000,000 shares for purposes of conversion of the Note. The Company shall cause the Transfer Agent to agree that it will not reduce the reserve under any circumstances, unless such reduction is pre-approved in writing by the Buyer.
2. Buyer’s Investment Representations; Governing Law; Miscellaneous.
2.1 Buyer’s Investment Representations.
(a) This Agreement is made in reliance upon the Buyer’s representation to the Company, which by its acceptance hereof Buyer hereby confirms, that the Securities to be received by it will be acquired for investment for its own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and that it has no present intention of selling, granting participation in, or otherwise distributing the same, but subject nevertheless to any requirement of law that the disposition of its property shall at all times be within its control.
1 |
|
(b) The Buyer understands that the Securities are not registered under the 1933 Act, on the basis that the sale provided for in this Agreement and the issuance of securities hereunder is exempt from registration under the 1933 Act pursuant to Section 4(a)(2) thereof, and that the Company’s reliance on such exemption is predicated on the Buyer’s representations set forth herein. The Buyer realizes that the basis for the exemption may not be present if, notwithstanding such representations, the Buyer has in mind merely acquiring shares of the Securities for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The Buyer does not have any such intention.
(c) The Buyer understands that the Securities may not be sold, transferred, or otherwise disposed of without registration under the 1933 Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Securities or an available exemption from registration under the 1933 Act, the Stock must be held indefinitely. In particular, the Buyer is aware that the Securities may not be sold pursuant to Rule 144 or Rule 701 promulgated under the 1933 Act unless all of the conditions of the applicable Rules are met. Among the conditions for use of Rule 144 is the availability of current information to the public about the Company. Such information is not now available, and the Company has no present plans to make such information available. The Buyer represents that, in the absence of an effective registration statement covering the Securities, it will sell, transfer, or otherwise dispose of the Securities only in a manner consistent with its representations set forth herein and then only in accordance with the provisions of Section 5(d) hereof.
(d) The Buyer agrees that in no event will it make a transfer or disposition of any of the Securities (other than pursuant to an effective registration statement under the 1933 Act), unless and until (i) the Buyer shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the disposition, and (ii) if requested by the Company, at the expense of the Buyer or transferee, the Buyer shall have furnished to the Company either (A) an opinion of counsel, reasonably satisfactory to the Company, to the effect that such transfer may be made without registration under the 1933 Act or (B) a “no action” letter from the Securities and Exchange Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Securities and Exchange Commission that action be taken with respect thereto. The Company will not require such a legal opinion or “no action” letter in any transaction in compliance with Rule 144.
(e) The Buyer represents and warrants to the Company that it is an “accredited investor” within the meaning of Securities and Exchange Commission Rule 501 of Regulation D, as presently in effect and, for the purpose of Section 25102(f) of the California Corporations Code, he or she is excluded from the count of “purchasers” pursuant to Rule 260.102.13 thereunder.
2.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of California or in the federal courts located in San Diego, California. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
2 |
|
2.3 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.
2.4 Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.
2.5 Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
2.6 Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the Buyer.
2.7 Notices. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of:
2.7.1 the date delivered, if delivered by personal delivery as against written receipt therefor or by e-mail to an executive officer, or by confirmed facsimile,
2.7.2 the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or
2.7.3 the third Trading Day after mailing by domestic or international express courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by ten (10) calendar days’ advance written notice similarly given to each of the other parties hereto):
3 |
|
If to the Company, to:
Cool Technologies, Inc.
8875 Hidden River Parkway, Suite 300
Tampa, FL 33637
jbibb@cooltechnologiesinc.com
If to the Buyer:
Lucas Hoppel
Email: Luke@LGHInvestments.com
2.8 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of the Buyer, which consent may be withheld at the sole discretion of the Buyer; provided, however, that in the case of a merger, sale of substantially all of the Company’s assets or other corporate reorganization, the Buyer shall not unreasonably withhold, condition or delay such consent. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Buyer hereunder may be assigned by Buyer to a third party, including its financing sources, in whole or in part, without the need to obtain the Company’s consent thereto.
2.9 Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
2.10 Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.
2.11 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
2.12 Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.
4 |
|
2.13 Buyer’s Rights and Remedies Cumulative. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents on the Buyer are cumulative and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that the Buyer may have, whether specifically granted in this Agreement or any other Transaction Document, or existing at law, in equity, or by statute; and any and all such rights and remedies may be exercised from time to time and as often and in such order as the Buyer may deem expedient.
2.14 Ownership Limitation. If at any time after the Closing, the Buyer shall or would receive shares of Common Stock in payment of interest or principal under Note, upon exercise of the Warrant, so that the Buyer would, together with other shares of Common Stock held by it or its Affiliates, own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of shares exceeding 9.99% of the number of shares of Common Stock outstanding on such date (the “Maximum Percentage”), the Company shall not be obligated and shall not issue to the Buyer shares of Common Stock which would exceed the Maximum Percentage, but only until such time as the Maximum Percentage would no longer be exceeded by any such receipt of shares of Common Stock by the Buyer. The foregoing limitations are enforceable, unconditional and non-waivable and shall apply to all Affiliates and assigns of the Buyer.
Attorneys’ Fees and Cost of Collection. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement or any of the other Transaction Documents, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.
[Remainder of page intentionally left blank; signature page to follow]
5 |
|
SUBSCRIPTION AMOUNT:
Original Principal Amount of Note: |
$66,000.00 |
Purchase Price: |
$60,000.00 |
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
THE COMPANY: |
|
|
|
|
|
Cool Technologies, Inc. |
|
|
|
|
|
By: |
/s/ Tim Hassett |
|
|
Mr. Tim Hassett Chief Executive Officer |
|
|
|
|
THE BUYER:
LGH Investments, LLC |
|
|
|
|
|
By: |
/s/ Lucas Hoppel |
|
|
Lucas Hoppel Managing Member |
|
6 |
|
EXHIBIT A
NOTE
7 |
|
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
COOL TECHNOLOGIES, INC.
PROMISSORY NOTE
Issuance Date: September 15, 2020 |
Original Principal Amount: $66,000 |
Note No. WARM-17 |
Consideration Paid at Close: $60,000 |
FOR VALUE RECEIVED, Cool Technologies, Inc., a Nevada corporation with a par value of $0.001 per common share (“Par Value”) (the "Company"), hereby promises to pay to the order of LGH Investments, LLC, a Wyoming limited liability company or registered assigns (the "Holder") the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest ("Interest") on any outstanding Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the "Issuance Date") until the same becomes due and payable, upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof).
The Original Principal Amount is $66,000 (sixty-six thousand) plus accrued and unpaid interest and any other fees. The Consideration is $60,000 (sixty thousand) payable by wire transfer (there exists a $6,000 original issue discount (the “OID”)). The Holder shall pay $60,000 of Consideration upon closing of this Note.
(1) GENERAL TERMS
(a) Payment of Principal. The "Maturity Date" shall be seven months from the date of each payment of Consideration, as may be extended at the option of the Holder in the event that, and for so long as, an Event of Default (as defined below) shall not have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall not have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and the failure to cure would result in an Event of Default.
(b) Interest. A one-time interest charge of three percent (3%) (“Interest Rate”) shall be applied on the Issuance Date to the Original Principal Amount. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its assignee in whose name this Note is registered on the records of the Company regarding registration and transfers of Notes in cash or converted into Common Stock at the Conversion Price provided the Equity Conditions are satisfied.
8 |
|
(c) Security. This Note shall not be secured by any collateral or any assets pledged to the Holder
(2) EVENTS OF DEFAULT.
(a) An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
(i) The Company's failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder);
(ii) A Conversion Failure as defined in section 3(b)(ii)
(iii) The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 180 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (180) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;
(iv) The Company or any subsidiary of the Company shall default in any of its obligations under any other Note or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $50,000, whether such indebtedness now exists or shall hereafter be created; and
(v) The Common Stock is suspended or delisted for trading on the Over the Counter OTCQB Venture Marketplace or OTCPink Open Marketplace (the “Primary Market”).
(vi) The Company loses its ability to deliver shares via “DWAC/FAST” electronic transfer.
(vii) The Company loses its status as “DTC Eligible.”
9 |
|
(viii) The Company shall become late or delinquent in its filing requirements as a fully-reporting issuer registered with the Securities & Exchange Commission.
(ix) The Company shall fail to reserve and keep available out of its authorized Common Stock a number of shares equal to at least the full number of shares of Common Stock issuable upon conversion of all outstanding amounts under this Note.
(b) Upon the occurrence of any Event of Default that has not been cured within five calendar days, the Outstanding Balance shall immediately increase to 125% of the Outstanding Balance immediately prior to the occurrence of the Event of Default (the “Default Effect”) and a daily penalty of $100 (one hundred) will accrue until the default is remedied. The Default Effect shall automatically apply upon the occurrence of an Event of Default without the need for any party to give any notice or take any other action. In addition, all amounts due and payable under the Note shall, at the election of the holder, accelerate and become immediately due and payable upon notice from the Holder to the Company.
(3) CONVERSION OF NOTE. The Holder shall have the right, but not the obligation, to convert the Outstanding Balance into shares of the Company’s Common Stock, on the terms and conditions set forth in this Section 3.
(a) Conversion Right. Subject to the provisions of Section 3(c), at any time or times, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 3(b), at the Conversion Price (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 3(a) shall be equal to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer agent fees, legal fees, costs and any other fees or costs that may be incurred or charged in connection with the issuance of shares of the Company’s Common Stock to the Holder arising out of or relating to the conversion of this Note.
(i) "Conversion Amount" means the portion of the Original Principal Amount and Interest to be converted, plus any penalties, redeemed or otherwise with respect to which this determination is being made.
(ii) "Conversion Price" shall equal shall equal 71% of the lowest volume weighted average price in the prior 10 trading days.
(b) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by email, facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York, NY Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company. On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (A) if legends are not required to be placed on certificates of Common Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule 144”) and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (B) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant the Rule 144. If this Note is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall, upon request of the Holder, as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice.
10 |
|
(ii) Company's Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of the facsimile or email copy of a Conversion Notice the Company shall fail to issue and deliver to Holder via “DWAC/FAST” electronic transfer the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), the Original Principal Amount of the Note shall increase by $1,000 per day until the Company issues and delivers a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (under Holder’s and Company’s expectation that any damages will tack back to the Issuance Date). Company will not be subject to any penalties once its transfer agent processes the shares to the DWAC system. If the Company fails to deliver shares in accordance with the timeframe stated in this Section, resulting in a Conversion Failure, the Holder, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Outstanding Balance with the rescinded conversion shares returned to the Company (under Holder’s and Company’s expectations that any returned conversion amounts will tack back to the original date of the Note).
(iii) Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Company shall notify the Holder of such additional or more favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the Holder. The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage. Financings in which the Company receives proceeds of one million dollars or greater or excluded from the Terms of Future Financings.
(iv) DTC Eligibility & Sub-Penny. If the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the effective Conversion Price as calculated in Section 3(a)(ii) is less than $0.01 at any time (regardless of whether or not a Conversion Notice has been submitted to the Company), the Principal Amount of the Note shall increase by five thousand dollars ($10,000) (under Holder’s and Company’s expectation that any Principal Amount increase will tack back to the Issuance Date). In addition, the Conversion Price shall be permanently redefined to equal 60% of the lowest traded price occurring during the fifteen (15) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.
11 |
|
(c) Limitations on Conversions or Trading.
(i) Beneficial Ownership. The Company shall not effect any conversions of this Note and the Holder shall not have the right to convert any portion of this Note or receive shares of Common Stock as payment of interest hereunder to the extent that after giving effect to such conversion or receipt of such interest payment, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment of interest. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 4.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the principal amount of this Note is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a principal amount of this Note that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date in accordance with Section 3(a) and, any principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Note. In the event that the Market Capitalization of the Company falls below $2,500,000, the term “4.99%” above shall be permanently replaced with “9.99%”. “Market Capitalization” shall be defined as the product of (a) the closing price of the Common Stock of the Common stock multiplied by (b) the number of shares of Common Stock outstanding as reported on the Company’s most recently filed Form 10-K or Form 10-Q. The provisions of this Section may be waived by Holder upon not less than 65 days prior written notification to the Company.
(ii) Capitalization. So long as this as this Note is outstanding, upon written request of the Holder, the Company shall furnish to the Holder the then-current number of common shares issued and outstanding, the then-current number of common shares authorized, and the then-current number of shares reserved for third parties.
(d) Other Provisions.
(i) Share Reservation. The Company shall at all times reserve and keep available out of its authorized Common Stock a number of shares equal to two times the number of shares of Common Stock issuable upon conversion of all outstanding amounts under this Note; and within 3 (three) Business Days following the receipt by the Company of a Holder's notice that such minimum number of shares of Common Stock is not so reserved, the Company shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
(ii) Prepayment. This Note may not be prepaid without the written consent of the Holder.
(iii) All calculations under this Section 3 shall be rounded up to the nearest $0.00001 or whole share.
(iv) Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
12 |
|
(4) PIGGYBACK REGISTRATION RIGHTS. The Company shall include on the current registration statement the Company has with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note. Failure to do so will result in liquidated damages of 15% of the outstanding principal balance of this Note, but not less than $15,000, being immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.
(5) REISSUANCE OF THIS NOTE.
(a) Assignability. The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without Company’s approval.
(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note representing the outstanding Principal.
(6) NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) (iii) upon receipt, when sent by email; or (iv) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be those set forth in the communications and documents that each party has provided the other immediately preceding the issuance of this Note or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
The addresses for such communications shall be:
If to the Company, to:
Cool Technologies, Inc
8875 Hidden River Parkway, Suite 300
Tampa, FL 33637
13 |
|
If to the Holder:
Lucas Hoppel
Phone: 858-232-5110
Email: Luke@LukeHoppel.com
(7) APPLICABLE LAW AND VENUE. This Note shall be governed by and construed in accordance with the laws of the State of California, without giving effect to conflicts of laws thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of California or in the federal courts located in the city of San Diego, in the State of California. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts.
(8) WAIVER. Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.
(9) LIQUIDATED DAMAGES. Holder and Company agree that in the event Company fails to comply with any of the terms or provisions of this Note, Holder's damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties' inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Holder and Company agree that any fees, balance adjustments, default interest or other charges assessed under this Note are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Holder's and Company's expectations that any such liquidated damages will tack back to the Closing Date for purposes of determining the holding period under Rule 144).
[Signature Page Follows]
14 |
|
IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date set forth above.
COMPANY:
Cool Technologies, Inc. |
|||
By: |
/s/ Tim Hassett |
||
|
Name: |
Tim Hassett | |
Title: | Chief Executive Officer | ||
|
HOLDER:
LGH Investments, LLC |
|
|
|
|
|
|
|
By: |
/s/ Lucas Hoppel |
|
|
Name: |
Lucas Hoppel |
|
|
Title: |
Managing Member |
|
|
|
|
|
[Signature Page to Convertible Note No. WARM-17]
15 |
|
EXHIBIT A
CONVERSION NOTICE
[Company Contact, Position]
[Company Name]
[Company Address]
[Contact Email Address}
The undersigned hereby elects to convert a portion of the $ Convertible Note issued to Lucas Hoppel on into Shares of Common Stock of according to the conditions set forth in such Note as of the date written below.
By accepting this notice of conversion, you are acknowledging that the number of shares to be delivered represents less than 10% (ten percent) of the common stock outstanding. If the number of shares to be delivered represents more than 9.99% of the common stock outstanding, this conversion notice shall immediately automatically extinguish and debenture Holder must be immediately notified.
16 |
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Timothy Hassett, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Cool Technologies, Inc (the “registrant”) for the quarter ended June 30, 2020. |
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: October 5, 2020 |
|
|
|
|
|
/s/ Timothy Hassett |
|
|
By: |
Timothy Hassett |
|
|
|
Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Quentin Ponder, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Cool Technologies, Inc. (the “registrant”) for the quarter ended June 30, 2020. |
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
2. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: October 5, 2020 |
|
/s/ Quentin Ponder |
|
|
By |
Quentin Ponder |
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Cool Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy Hassett, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
|
(1) |
The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
|
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: October 5, 2020 |
|
/s/ Timothy Hassett |
|
|
By: |
Timothy Hassett |
|
|
|
Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Cool Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Quentin Ponder, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
|
(1) |
The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
|
|
(2) |
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: October 5, 2020 |
|
/s/ Quentin Ponder |
|
|
By: |
Quentin Ponder |
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|