FISCAL
QUARTER
ENDING
|
HIGH
BID
|
LOW
BID
|
|||||
December
31, 2007
|
$
|
.08
|
$
|
.07
|
|||
September
30, 2007
|
$
|
.15
|
$
|
.13
|
|||
June
30, 2007
|
$
|
.21
|
$
|
.19
|
|||
March
31, 2007 (1)
|
$
|
$
|
|||||
December
31, 2006
|
$
|
.16
|
$
|
.11
|
|||
September
30, 2006
|
$
|
.15
|
$
|
.10
|
|||
June
30, 2006
|
$
|
.16
|
$
|
.11
|
|||
March
31, 2006
|
$
|
.14
|
$
|
.10
|
(1)
|
Due
to the Company’s name and symbol change in the first quarter of 2007, we
are unable to obtain the high and low bid prices for that
quarter.
|
Equity
Compensation Plan Information
|
||||
Plan
Category
|
Number
of securities to
|
Weighted-average
|
Number
of securities
|
|
be
issued upon exercise
|
exercise
price of
|
remaining
available for
|
||
of
outstanding options,
|
outstanding
options,
|
future
issuance under
|
||
warrants
and rights (a)
|
warrants
and rights (b)
|
equity
compensation
|
||
plans
(excluding
|
||||
securities
reflected in
|
||||
column
(a))
|
||||
Equity
compensation
|
N/A
|
N/A
|
N/A
|
|
plans
approved by
|
||||
security
holders
|
||||
Equity
compensation
|
4,457,370(1)
|
$.06
|
N/A
|
|
plans
not approved by
|
||||
security
holders
|
15,000,000(2)
|
Price
as listed on the
|
5,150,000
|
|
OTCBB
at the time of
|
||||
issuance.
|
||||
19,500,000(3)
|
$.06
|
N/A
|
||
1,500,000(4)
|
$.06
|
N/A
|
||
750,000(5)
|
$.06
|
N/A
|
||
500,000(6)
|
$.06
|
N/A
|
||
1,000,000(7)
|
$.06
|
N/A
|
||
12,000,000(8)
|
$0.0975
|
12,000,000
|
||
5,000,000
(9)
|
$0.108
|
N/A
|
(1)
|
Consists
of a warrant issued by the Company to Gary De Laurentiis, its Director and
CTO, pursuant to which Mr. De Laurentiis may purchase up to 2,457,370
shares of common stock of the Company, exercise price of $.06 per share
and a Warrant issued by the Company pursuant to which Mr. De Laurentiis
may purchase up to 2,000,000 shares of common stock of the Company at a
price of $.06 per share. These warrants were fully assigned and
cancelled on August 11, 2005.
|
(2)
|
2005
Stock Plan of the Company adopted by the Board of Directors on January 28,
2005. The 2005 Stock Plan (the “Plan”) was adopted by the Board of
Directors as a method to compensate company employees, directors and
non-employee independent contractors that provide services to the Company.
The Plan is administered by two non-employee directors of the Company
based upon recommendations for issuances by the Company’s
CTO.
|
(3)
|
Consists
of a warrant issued by the Company to Gary De Laurentiis, its Director and
CTO, pursuant to which Mr. De Laurentiis may purchase up to 20,000,000
shares of common stock of the Company, exercise price of $.06 per share.
While the Company authorized the warrant in the amount of 20,000,000
shares, simultaneous with the issuance of the warrant, Mr. De Laurentiis
transferred the rights represented by the warrant in the right to buy
500,000 shares of common stock of the company to another. Accordingly, the
presentation of the warrant in this report has been limited to the
19,500,000 shares the right to purchase Mr. De Laurentiis actually
received. In connection with various assignments made from this
warrant to other related and unrelated parties, Mr. De Laurentiis can
purchase up to 7,384,682 shares of common stock of the Company in
accordance with this warrant.
|
(5)
|
Consists
of a warrant issued by the Company to Frederick W. Smith, Jr., its former
Chief Financial Officer, pursuant to which Mr. Smith may purchase up to
500,000 shares of common stock of the Company, exercise price of $.06 per
share and a warrant issued by the Company pursuant to which Mr. Smith may
purchase up to 250,000 shares of common stock of the Company at an
exercise price of $.06 per share.
|
(6)
|
Consists
of a warrant issued by the Company to George Kanakis, a former Director,
pursuant to which Mr. Kanakis may purchase up to 500,000 shares of common
stock of the Company, exercise price of $.06 per
share.
|
(7)
|
Consists
of a warrant issued by the Company to Jeffrey Chartier, a former Director,
pursuant to which Mr. Chartier may purchase up to 1,000,000 shares of
common stock of the Company, exercise price of $.06 per
share.
|
(8)
|
Consists
of a warrant issued by the Company to Mario Sandoval, its former Chief
Operating Officer, pursuant to which Mr. Sandoval may purchase up to
12,000,000 shares of common stock of the Company at an exercise price of
$0.0975 per share. This warrant was issued in accordance with
Mr. Sandoval’s employment agreement, dated October 20,
2006. Under this agreement, Mr. Sandoval received a total of
24,000,000 warrant shares, of which 17,000,000 had vested. In
connection with Mr. Sandoval’s departure, he agreed to return his
previously issued common stock purchase warrant in exchange for 5,000,000
shares of common stock, par value $0.001 per share, with a per share price
at $0.07 per share which were filed on Form S-8 under the Securities Act
of 1933 with the SEC.
|
(9)
|
Consists
of a warrant issued by the Company to Craig Hardy, its former Chief
Financial Officer, who resigned in March 2008, pursuant to which Mr. Hardy
may purchase up to 5,000,000 shares of common stock of the Company at an
exercise price of $0.108 per share/cashless. This warrant was
issued in accordance with Mr. Hardy’s employment agreement, dated August
10, 2007. Under this agreement, Mr. Hardy is to receive a total
of 5,000,000 warrant shares, of which 1,250,000 have
vested.
|
·
|
The
Company received cash of approximately $1.9 million pursuant to issuance
of short-term notes payable to new and existing
investors;
|
·
|
Holders
of all convertible notes payable outstanding having a total principal
amount outstanding of approximately $13.2 million (before debt discount of
approximately $2.2 million), together with accrued interest of
approximately $1.7 million, converted such notes and returned to the
Company warrants to purchase approximately 39 million shares of
common stock at $0.06 per share and in exchange received
approximately 243 million shares of the Company’s common
stock;
|
·
|
Pursuant
to terms of a special offer made to all holders of warrants to purchase
common stock, approximately 124 million warrants were exchanged for
approximately 82 million shares of Company common stock;
and
|
·
|
The
Company entered into agreements with certain service providers pursuant to
which the Company will issue approximately 16 million shares of its common
stock as payment for amounts owed for services of approximately
$754,000.
|
Actual
|
Note
Conversions
|
Shares
for Warants
|
Shares
for Services
|
Pro
Forma
|
||||||||||||||||
Total
Liabilities
|
$ | 21,270 | $ | (12,700 | ) | $ |
-
|
$ |
(754
|
)
|
$ | 7,816 | ||||||||
Total
stockholders’ equity (deficit)
|
(11,755 | ) | 12,700 |
-
|
754
|
1,699 | ||||||||||||||
Total
|
$ | 9,515 | $ | - | $ |
-
|
$ |
0
|
$ | 9,515 | ||||||||||
Shares
issued and issuable
|
198,101 | 243,000 |
82,000
|
19,000
|
542,101 | |||||||||||||||
Warrants issued and issuable | 182,697 | (39,000 | ) |
(124,000
|
) |
-
|
19,697 |
·
|
pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our
assets;
|
·
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and
directors;
|
·
|
and
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have
a material effect on the financial
statements.
|
NAME
|
AGE
|
POSITION
|
Rodney
S. Rougelot
|
44
|
Director
and Chief Executive Officer and Interim Chief Financial
Officer
|
Gary
M. De Laurentiis
|
62
|
Director
and Chief Technology Officer
|
David
M. Otto
|
49
|
Director
|
Lawrence
A. Krause
|
67
|
Director
|
Ronald
M. Domingue
|
45
|
Director
|
Roy A. Herberger | 64 | Director |
William
Whittaker
|
58
|
Chairman
|
Craig
Hardy
|
39
|
Former
Chief Financial Officer
|
Mario
Sandoval
|
44
|
Former
Chief Operating Officer
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan Compensation
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
|
All
Other Compensation
|
Total
|
CEO
Rodney
S. Rougelot
Appointed
July 2006 (1)
|
2007
|
$330,000
|
$0
|
$1,382,000
|
$0
|
$0
|
$0
|
$0 | $1,712,000 |
2006
|
$129,198
|
$0
|
$4,600,000
|
$0
|
$0
|
$0
|
$8,700
|
$4,737,898
|
|
2005
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
CTO
Gary
De Laurentiis
(2)
|
2007
|
$290,000
|
$0
|
$160,000
|
$0
|
$0
|
$0
|
$0 | $450,000 |
2006
|
$291,628
|
$0
|
$847,000
|
$0
|
$0
|
$0
|
$7,500
|
$1,146,128
|
|
2005
|
$84,000
|
$0
|
$0
|
$0
|
$0
|
$0
|
$168,000
|
$252,000
|
|
Former
COO
Mario
Sandoval (3)
|
2007
|
$290,769
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0 | $290,769 |
2006
|
$45,833
|
$0
|
$0
|
$1,600,000
|
$0
|
$0
|
$5,800
|
$1,651,633
|
|
2005
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Former
CFO
Craig
Hardy
Appointed
Aug. 2007
(4)
|
2007
|
$78,846
|
$0
|
$0
|
$198,000
|
$0
|
$0
|
$0 | $78,846 |
2006
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
2005
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
(1)
|
Under
the terms of Mr. Rougelot’s employment agreement, he received 35,200,000
shares of Company common stock, of which 17,600,000 (50%) shares are
fully-vested, and of which 8,800,000 shares vested in September 2007 and
the remaining 8,800,000 vest pro-rata from October 2007 to September
2008. The total value of the shares based on the $0.13 per
share grant date quoted trading price of the Company’s common stock was
approximately $4.6 million. In connection with this agreement,
the Company recorded compensation expense in 2007 of approximately $1.4
million for fully-vested shares and for a portion of the unvested shares
amortized on a straight-line basis over the vesting periods. In
addition, pursuant to terms of the executive’s employment agreement, the
executive received an additional 8,800,000 fully-vested shares in
connection with the certain agreement specified capital raising events,
and as a result of the occurrence of such event, the Company recorded
additional compensation expense of approximately $1.1 million based on the
$0.125 per share closing quoted trading price on the date of the
event. A total of 44,000,000 million shares of Company common
stock were issued to the executive in 2006, a portion of which is subject
to return in accordance with vesting provisions. This information is
also found in the Outstanding Equity Awards at Fiscal Year-End table and
the Option Exercises and Stock Vested table below.
|
(2)
|
Under
the terms of Mr. De Laurentiis’ employment agreement, he will receive
24,000,000 fully-vested shares or share equivalents (warrants), of which
he had previously received 17,953,208 of such shares and share
equivalents, or an additional 6,046,792 shares. In connection
with this agreement, inasmuch as the shares were fully vested in 2006, the
Company recorded compensation expense and an increase in additional
paid-in capital of $847,000, which was determined on the $0.14 per share
quoted trading price on the date of the employment agreement. This information is
also found in the Outstanding Equity Awards at Fiscal Year-End table and
the Option Exercises and Stock Vested table below. In 2007, in connection
with this agreement, Mr. DeLaurentiis received an additional 2,000,000
fully-vested shares of Company common stock, which the Company recorded as
compensation expense of $160,000, which was, determined on the $0.08 per
share quoted trading price on the date of the
award.
|
(3)
|
Mario
Sandoval served as the COO from October 2006 until his resignation
effective March 1, 2008. Under the terms of Mr. Sandoval’s
employment agreement, he was to receive shares of Company common stock (or
stock options, at the executive’s election) covering 5% of Common Stock
Equivalents, as defined in the agreement. The Effective Date of
the employment agreement was October 19, 2006, at which date the executive
received options to purchase 24,000,000 common shares (shares were not
elected) of Company common stock, of which 12,000,000 (50%) warrant were
fully-vested, and of which 6,000,000 warrants vest in October 2007 and the
remaining 6,000,000 were to vest pro-rata from November 2007 to October
2008. The warrants were exercisable at $0.0975 per share for ten years. In
connection with this agreement, the Company recorded compensation expense
of approximately $1.6 million based on the fair value as determined
utilizing the Black-Scholes valuation model as of the Effective Date for
fully-vested shares, and $155,000 for a portion of the unvested shares
amortized on a straight-line basis over the vesting
periods. This information is also found in the Outstanding
Equity Awards at Fiscal Year-End table and the Option Exercises and Stock
Vested table below. In connection with Mr. Sandoval’s
departure, he agreed to return his previously issued common stock purchase
warrant in exchange for 5,000,000 shares of common stock, par value $0.001
per share, with a per share price at $0.07 per share which were filed on
Form S-8 under the Securities Act of 1933 with the
SEC.
|
(4)
|
Craig
Hardy served as the CFO from August 2007 until his resignation in March
2008. Pursuant to the terms of Mr. Hardy’s employment agreement,
he was to receive an annual salary of $250,000 and he was
to receive equity in the Company of up to 5,000,000 shares of the
Company’s issued and outstanding stock based on his length of service to
the Company. In connection with the employment agreement’s
equity awards, Mr. Hardy was issued a common stock purchase warrant to
acquire up to 5,000,000 shares of common stock at $0.108 per
share/cashless. This information is also found in the
Outstanding Equity Awards at Fiscal Year-End table and the Option
Exercises and Stock Vested table
below.
|
Name
|
Option
Awards
|
Stock
Awards
|
|||||||
Number
of Securities Underlying Unexercised Options
|
Number
of Securities Underlying Unexercised Options
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unearned
Options
|
Option
Exercise Price
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
|
Market
Value of Shares or Units of Stock That Have Not
Vested
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
|
|
|
|
||||||||
Exercisable
|
Unexercisable
|
||||||||
CEO
Rodney
S. Rougelot (1)
|
0
|
0
|
0
|
$0
|
N/A
|
6,600,000
|
$462,000
|
0
|
$0
|
CTO
Gary
De Laurentiis (2)
|
0
|
0
|
0
|
$0
|
N/A
|
0
|
$0
|
0
|
$0
|
Former
COO
Mario
Sandoval (3)
|
0
|
0
|
0
|
$0
|
N/A
|
12,000,000
|
$0
|
0
|
$0
|
Former
CFO
Craig
Hardy (4)
|
0
|
0
|
0
|
$0
|
N/A
|
3,750,000
|
$0
|
0
|
$0
|
(1)
|
Under
the terms of Mr. Rougelot’s employment agreement, he received 35,200,000
shares of Company common stock, of which 17,600,000 (50%) shares are
fully-vested, and of which 8,800,000 shares vested in September 2007 and
the remaining 8,800,000 vest pro-rata from October 2007 to September
2008. The total value of the shares based on the $0.13 per
share grant date quoted trading price of the Company’s common stock was
approximately $4.6 million. In connection with this agreement,
the Company recorded compensation expense in 2007 of approximately
$1.4million for fully-vested shares and for a portion of the unvested
shares amortized on a straight-line basis over the vesting
periods. In addition, pursuant to terms of the executive’s
employment agreement, the executive received an additional 8,800,000
fully-vested shares in connection with the certain agreement specified
capital raising events, and as a result of the occurrence of such event,
the Company recorded additional compensation expense of approximately $1.1
million based on the $0.125 per share closing quoted trading price on the
date of the event. A total of 44,000,000 million shares of
Company common stock were issued to the executive in 2006, a portion of
which is subject to return in accordance with vesting provisions. This information is
also found in the Summary Compensation table above and the Option
Exercises and Stock Vested table
below.
|
(2)
|
Under
the terms of Mr. De Laurentiis’ employment agreement, he will receive
24,000,000 fully-vested shares or share equivalents (warrants), of which
he had previously received 17,953,208 of such shares and share
equivalents, or an additional 6,046,792 shares. In connection
with this agreement, inasmuch as the shares were fully vested, the Company
recorded compensation expense and an increase in additional paid-in
capital of $847,000, which was determined on the $0.14 per share quoted
trading price on the date of the employment agreement. Mr. De Laurentiis
has not yet been issued these shares. This information is also
found in the Summary Compensation table above and the Option Exercises and
Stock Vested table below.
|
(3)
|
Mario
Sandoval served as the COO from October 2006 until his resignation
effective March 1, 2008. Under the terms of Mr. Sandoval’s
employment agreement, he is to receive shares of Company common stock (or
stock options, at the executive’s election) covering 5% of Common Stock
Equivalents, as defined in the agreement. The Effective Date of
the employment agreement is October 19, 2006, at which date the executive
is to receive options to purchase 24,000,000 common shares (shares were
not elected) of Company common stock, of which 12,000,000 (50%) warrant
are fully-vested, and of which 6,000,000 warrants vest in October 2007 and
the remaining 6,000,000 vest pro-rata from November 2007 to October 2008.
The warrants are exercisable at $0.0975 per share for ten years. In
connection with this agreement, the Company recorded compensation expense
of approximately $1.6 million based on the fair value as determined
utilizing the Black-Scholes valuation model as of the Effective Date for
fully-vested shares, and $155,000 for a portion of the unvested shares
amortized on a straight-line basis over the vesting periods. In
connection with Mr. Sandoval’s departure, he agreed to return his
previously issued common stock purchase warrant in exchange for 5,000,000
shares of common stock, par value $0.001 per share, with a per share price
at $0.07 per share which were filed on Form S-8 under the Securities Act
of 1933 with the SEC. This information is also found in the
Summary Compensation table aboveand the Option Exercises and Stock Vested
table below. Effective March 1, 2008 Mr. Sandoval
resigned.
|
(4)
|
Craig
Hardy served as the CFO from August 2007 until his resignation in March
2008. Pursuant to the terms of Mr. Hardy’s employment agreement,
he was to receive an annual salary of $250,000 and he was
to receive equity in the Company of up to 5,000,000 shares of the
Company’s issued and outstanding stock based on his length of service to
the Company. In connection with the employment agreement’s
equity awards, Mr. Hardy was issued a common stock purchase warrant to
acquire up to 5,000,000 shares of common stock at $0.108 per
share/cashless. This information is
also found in the Summary Compensation table above and the Option
Exercises and Stock Vested table below.
|
Name
|
Option
Awards
|
Stock
Awards
|
||
Number
of Shares Acquired on Exercise
|
Value
Realized on Exercise
|
Number
of Shares Acquired on Vesting
|
Value
Realized on Vesting
|
|
CEO
Rodney
S. Rougelot (1)
|
0
|
$0
|
11,000,000
|
$1,382,000
|
CTO
Gary
De Laurentiis (2)
|
0
|
$0
|
2,000,000
|
$160,000
|
Former
COO
Mario
Sandoval (3)
|
0
|
$0
|
0
|
$0
|
Former
CFO
Craig
Hardy (4)
|
0
|
$0
|
0
|
$0
|
(1)
|
Under
the terms of Mr. Rougelot’s employment agreement, he received 35,200,000
shares of Company common stock, of which 17,600,000 (50%) shares are
fully-vested, and of which 8,800,000 shares vested in September 2007 and
the remaining 8,800,000 vest pro-rata from October 2007 to September
2008. The total value of the shares based on the $0.13 per
share grant date quoted trading price of the Company’s common stock was
approximately $4.6 million. In connection with this agreement,
the Company recorded compensation expense in 2007 of approximately $1.4
million for fully-vested shares and for a portion of the unvested shares
amortized on a straight-line basis over the vesting periods. In
addition, pursuant to terms of the executive’s employment agreement, the
executive received an additional 8,800,000 fully-vested shares in
connection with the certain agreement specified capital raising events,
and as a result of the occurrence of such event, the Company recorded
additional compensation expense of approximately $1.1 million based on the
$0.125 per share closing quoted trading price on the date of the
event. A total of 44,000,000 million shares of Company common
stock were issued to the executive in 2006, a portion of which is subject
to return in accordance with vesting provisions. In 2007, 11,000,000 of
these shares vested. This information is also found in the Summary
Compensation table and Outstanding Equity Awards at Fiscal Year-End table
above.
|
(2)
|
Under
the terms of Mr. De Laurentiis’ employment agreement, he will receive
24,000,000 fully-vested shares or share equivalents (warrants), of which
he had previously received 17,953,208 of such shares and share
equivalents, or an additional 6,046,792 shares. In 2006, in
connection with this agreement, inasmuch as the shares were fully vested,
the Company recorded compensation expense and an increase in additional
paid-in capital of $847,000, which was determined on the $0.14 per share
quoted trading price on the date of the employment agreement. Mr. De Laurentiis
has not yet been issued these shares. In 2007, in connection
with this agreement, Mr. DeLaurentiis received an additional 2,000,000
fully-vested shares of Company common stock, which the Company recorded as
compensation expense of $160,000, which was, determined on the $0.08 per
share quoted trading price on the date of the award. This information is
also found in the Summary Compensation table and the Outstanding Equity
Awards at Fiscal Year-End table
above.
|
(3)
|
Mario
Sandoval served as the COO from October 2006 until his resignation
effective March 1, 2008. Under the terms of Mr. Sandoval’s employment
agreement, he is to receive shares of Company common stock (or stock
options, at the executive’s election) covering 5% of Common Stock
Equivalents, as defined in the agreement. The Effective Date of
the employment agreement is October 19, 2006, at which date the executive
is to receive options to purchase 24,000,000 common shares (shares were
not elected) of Company common stock, of which 12,000,000 (50%) warrant
are fully-vested, and of which 6,000,000 warrants vest in October 2007 and
the remaining 6,000,000 vest pro-rata from November 2007 to October 2008.
The warrants are exercisable at $0.0975 per share for ten years. In
connection with this agreement, the Company recorded compensation expense
of approximately $1.6 million based on the fair value as determined
utilizing the Black-Scholes valuation model as of the Effective Date for
fully-vested shares, and $155,000 for a portion of the unvested shares
amortized on a straight-line basis over the vesting periods. In
connection with Mr. Sandoval’s departure, he agreed to return his
previously issued common stock purchase warrant in exchange for 5,000,000
shares of common stock, par value $0.001 per share, with a per share price
at $0.07 per share which were filed on Form S-8 under the Securities Act
of 1933 with the SEC. This information is also found in the
Summary Compensation table and the Outstanding Equity Awards at Fiscal
Year-End table above.
|
(4)
|
Craig
Hardy served as the CFO from August 2007 until his resignation in March
2008. Pursuant to the terms of Mr. Hardy’s employment agreement,
he was to receive an annual salary of $250,000 and he was
to receive equity in the Company of up to 5,000,000 shares of the
Company’s issued and outstanding stock based on his length of service to
the Company. In connection with the employment agreement’s
equity awards, Mr. Hardy was issued a common stock purchase warrant to
acquire up to 5,000,000 shares of common stock at $0.108 per
share/cashless. This information is
also found in the Summary Compensation table and the Outstanding Equity
Awards at Fiscal Year-End table
above.
|
Title
of Class:
|
Name
and Address of Beneficial Holder:
|
Amount
and Nature of Beneficial Ownership:
|
Percent
of Class (9):
|
Common,
$.001 par value
|
Gary
De Laurentiis
P.O.
Box 760, 5300 Claus Rd.,
Riverbank,
CA 95367
|
14,791,201
(1)
|
6%
|
Common,
$.001 par value
|
Lawrence
A. Krause
1001
Bayhill Drive, Suite 170
San
Bruno, CA 94066
|
15,325,000
(2)
|
5%
|
Common,
$.001 par value
|
David
M. Otto
601
Union Street, Suite 4500
Seattle,
WA 98164
|
17,032,514
(3)
|
6%
|
Common,
$.001 par value
|
Rodney
S. Rougelot
P.O.
Box 760, 5300 Claus Rd.
Riverbank,
CA 95367
|
43,919,000
(4)
|
15%
|
Common,
$.001 par value
|
Ronald
M. Domingue
5300
Claus Road, Box 760
Riverbank,
CA 95367
|
16,711,307
(5)
|
6%
|
Common,
$.001 par value
|
William
Whittaker
8070
La Jolla Shores Drive, #508
La
Jolla, CA 92037
|
29,822,970
(6)
|
10%
|
Common,
$.001 par value
|
Mario
Sandoval
5300
Claus Road, Box 760
Riverbank,
CA 95367
|
5,000,000
|
2%
|
Common,
$.001 par value
|
Voting
Trustee
5300
Claus Road, Box 760
Riverbank,
CA 95367
|
6,600,000
(7)
|
2%
|
Common stock purchase warrant |
Roy
A. Herberger
5834 N22nd Place
Phoenix, AZ 85016
|
500,000 (8) | <1% |
Total
Held by Officers and Directors:
|
149,701,992 (9)
|
||
Total
Held by Officers, Directors and Certain Beneficial Owners:
|
149,701,992(9)
|
(1)
|
Of
this amount, Mr. De Laurentiis owns 7,406,519 shares of common
stock. He has a common stock purchase warrant to acquire up to
7,384,682 shares at $0.06 per share/cashless. This warrant
expires on April 15, 2015.
|
(2)
|
As
the principal of KW Securities Corporation, Mr. Krause has a common stock
purchase warrant to acquire up to 14,625,000 shares at $0.06 per
share/cashless. This warrant expires on April 15,
2015. Mr. Krause also owns common stock purchase warrants to
acquire up to a total of 700,000 shares at $0.06 per
share/cashless. These warrants expire on April 15,
2015.
|
(3)
|
Mr.
Otto individually owns 2,500,000 shares of common stock. An
additional 3,231,085 shares of common stock are held The Otto Law Group,
PLLC, of which Mr. Otto is the principal. Mr. Otto also has
common stock purchase warrants to purchase a total of 1,500,000 shares of
common stock with a strike price of $0.06 per
share/cashless. These warrants expire on April 15,
2010. Cambridge Partners, LLC, of which Mr. Otto is
one of two members, has common stock purchase warrants to acquire up to a
total of 2,000,000 shares of common stock with a strike price of $0.06 per
share/cashless. These warrants expire on April 15,
2015. Finally, Saratoga Capital Partners, LLC (“Saratoga”), an
entity Mr. Otto is also a member of, has a common stock purchase warrants
to acquire up to a total of 7,801,429 shares of common stock with a strike
price of $0.06 per share/cashless. These warrants expire on
April 15, 2015. Saratoga also has 10% convertible notes
totaling $350,000 which can convert at $0.0975 per
share.
|
(4)
|
Mr.
Rougelot has common stock purchase warrant to acquire up to a total of
6,519,000 shares at $0.06 per share/cashless. These warrant
expires on April 15, 2015. Mr. Rougelot also has 10%
convertible debentures totaling $30,769 with a $0.0975 conversion
rate. Under the terms of Mr. Rougelot’s employment agreement,
he is eligible to receive an aggregate amount of restricted common stock
equal 44,000,000 shares, of which 39,600,000 have fully
vested.
|
(5)
|
Of
this amount, Mr. Domingue owns 9,025,640 shares of common
stock. Mr. Domingue owns common stock purchase warrants to
acquire up to a total of 4,766,667 shares at $0.12 per
share/cashless. Mr. Domingue owns common stock purchase
warrants to acquire up to a total of 2,919,000 shares at $0.06 per
share/cashless. These warrant expires on April 15,
2015. He also has 10% convertible notes totaling $117,716 which
can convert at $0.0975 per share.
|
(6)
|
Mr.
Whittaker is the general partner of Whittaker Capital Partners I, LP
(“WCP”). WCP has (i) warrants to purchase a total of 29,234,202
shares of common stock, each with a strike price of $0.06 per share; (ii)
a warrant to purchase 588,768 shares of common stock at $0.12 per
share/cashless; and (ii) 10% convertible notes totaling $5,921,734 which
can convert at $0.0975 per share. These warrants expires on
April 15, 2015.
|
(7)
|
Under
the terms of Mr. Rougelot’s employment agreement, he is eligible to
receive an aggregate amount of restricted common stock equal to a total of
44,000,000 shares. Of this amount, 6,600,000 shares have not
vested. In connection with an irrevocable proxy, David M. Otto
has been appointed attorney-in-fact to vote the shares in connection with
any shareholder meeting of ECO2 in
accordance with, and under the direction of, the Company’s Board of
Directors. The amount of shares the Voting Trustee may vote
will adjust in accordance with the vesting schedule in Mr. Rougelot’s
employment agreement.
|
(8)
|
Of
this amount, Mr. Herberger has a common stock purchase warrant to acquire
up to 500,000 shares of common stock with an excerise price of $0.19 per
share cashless. This warrant expires May 17,
2011.
|
(9)
|
As
of February 28, 2008, ECO2
Plastics, Inc. had 207,247,863 shares of common stock issued and
outstanding. The total amount of shares that could be issued to
certain beneficial owners and management within the next 60 days is
78,538,748shares. Based on these amounts, the percentage
ownership is based on a fully diluted amount of
285,786,611shares.
|
Fee Category |
2007
|
2006
|
|||||
Audit
Fees
|
$
|
125,000
|
$
|
112,000
|
|||
Audit-Related
Fees
|
4,800
|
1,500
|
|||||
Tax
Fees
|
-
|
||||||
All
Other Fees
|
-
|
||||||
Total
|
$
|
131,300
|
$
|
113,500
|
Exhibit
No.
|
Description
|
Location
|
||
3.1(i)
|
Amendment
to Restated Certificate of Incorporation
|
Incorporated
by reference to Exhibit A to the DEFR14C filed by the Company on November
30, 2005
|
||
3.2(i)
|
Restated
Certificate of Incorporation
|
Incorporated
by reference to Exhibit B to the DEF-14C filed by the Company on September
9, 2002
|
||
3.3(i)
|
Certificate
of Incorporation
|
Incorporated
by reference to the Form S-18 Registration Statement filed by the Company,
File No. 33-31-67
|
||
3.4(i)
|
Amendment
to Restated Certificate of Incorporation
|
Incorporated
by reference to the DEF-14C filed by the Company on February 22,
2007.
|
||
3.5(ii)
|
Bylaws
|
Incorporated
by reference to Exhibit B to the DEF-14C filed by the Company on September
9, 2002
|
||
4.1
|
Form
of Common Stock Warrant issued to Gary De Laurentiis (2,457,370), George
Kanakis and George Gitschel
|
Incorporated
by reference to Exhibit 4.5 to the 10-KSB filed by the Company on April
15, 2005
|
||
4.2
|
Form
of Common Stock Purchase Warrant issued to Jeffrey
Chartier
|
Incorporated
by reference to Exhibit 4.2 to the 10-KSB filed by the Company on May 17,
2006
|
||
4.3
|
Form
of Common Stock Purchase Warrant issued to George Kanakis
|
Incorporated
by reference to Exhibit 4.2 to the 10-KSB filed by the Company on May 17,
2006
|
||
4.4
|
Form
of Common Stock Warrant issued to David M. Otto
|
Incorporated
by reference to Exhibit 4.5 to the 8-K filed by the Company on November
22, 2005
|
||
4.5
|
Form
of Common Stock Warrant issued to Frederick Smith, Jr.
|
Incorporated
by reference to Exhibit 4.6 to the 8-K filed by the Company on November
22, 2005
|
||
4.6
|
Form
of Common Stock Warrant issued to Gary M. De Laurentiis
(20,000,000)
|
Incorporated
by reference to Exhibit 4.7 to the 8-K filed by the Company on November
22, 2005
|
||
4.7
|
Conversion
of Dormition Skete, Inc. Promissory Notes
|
Incorporated
by reference to Exhibit 4.1 to the 8-K filed by the Company on November
22, 2005
|
||
4.8
|
Conversion
of Dormition Skete, Inc. Promissory Note
|
Incorporated
by reference to Exhibit 4.2 to the 8-K filed by the Company on November
22, 2005
|
||
10.1
|
Commitment
Letter from the California Integrated Waste Management
Board
|
Incorporated
by reference to Exhibit 10.1 to the 10-QSB filed by the Company on
November 15, 2004
|
||
10.2
|
Agreement
with H. Muehlstein & Co., Inc.
|
Incorporated
by reference to Exhibit 10.2 to the 10-KSB filed by the Company on April
15, 2005
|
||
10.3
|
Business
Loan Agreement with the California Integrated Waste Management
Board
|
Incorporated
by reference to Exhibit 10.1 to the 10-QSB filed by the Company on August
19, 2005
|
||
10.4
|
Promissory
Note with the California Integrated Waste Management Board
|
Incorporated
by reference to Exhibit 10.2 to the 10-QSB filed by the Company on August
19, 2005
|
||
10.5
|
Commercial
Security Agreement with the California Integrated Waste Management
Board
|
Incorporated
by reference to Exhibit 10.3 to the 10-QSB filed by the Company on August
19, 2005
|
||
10.6
|
Commercial
Guarantee with the California Integrated Waste Management
Board
|
Incorporated
by reference to Exhibit 10.4 to the 10-QSB filed by the Company on August
19, 2005
|
||
10.7
|
Amendment
No. 3 to Patent License Agreement with Honeywell
|
Incorporated
by reference to Exhibit 10.5 to the 10-QSB filed by the Company on August
19, 2005
|
||
10.8
|
Form
of Loan Agreement with Capital Growth Equity Fund I, LLC
|
Incorporated
by reference to Exhibit 10.1 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.9
|
Form
of Promissory Note with Capital Growth Equity Fund I, LLC
|
Incorporated
by reference to Exhibit 10.2 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.10
|
Form
of Common Stock Purchase Warrant with Capital Growth Equity Fund I,
LLC
|
Incorporated
by reference to Exhibit 10.3 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.11
|
Form
of Loan Agreement with Capital Growth Investors
|
Incorporated
by reference to Exhibit 10.4 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.12
|
Form
of Promissory Note with Capital Growth Investors
|
Incorporated
by reference to Exhibit 10.5 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.13
|
Form
of Common Stock Purchase Warrant with Capital Growth Equity Fund I,
LLC
|
Incorporated
by reference to Exhibit 10.6 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.14
|
Form
of Loan Agreement with KW Investors
|
Incorporated
by reference to Exhibit 10.7 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.15
|
Form
of Promissory Note with KW Investors
|
Incorporated
by reference to Exhibit 10.8 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.16
|
Form
of Common Stock Purchase Warrant with KW Investors
|
Incorporated
by reference to Exhibit 10.9 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.17
|
Form
of Common Stock Purchase Agreement with Tiger Paw Capital
Corp.
|
Incorporated
by reference to Exhibit 10.10 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.18
|
Form
of Investors Rights Agreement with Tiger Paw Capital Corp.
|
Incorporated
by reference to Exhibit 10.11 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.19
|
Form
of Right of First Refusal Agreement with Tiger Paw Capital
Corp.
|
Incorporated
by reference to Exhibit 10.12 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.20
|
Form
of Covenant to Adjust with Tiger Paw Capital Corp.
|
Incorporated
by reference to Exhibit 10.13 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.21
|
Form
of Consulting Agreement with Tiger Paw Capital Corp.
|
Incorporated
by reference to Exhibit 10.14 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.22
|
Form
of Conditional Approval Letter from California Department of Conservation,
Division of Recycling
|
Incorporated
by reference to Exhibit 10.15 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.23
|
Form
of Conditional Commitment for Guarantee from California Department of
Conservation, Division of Recycling
|
Incorporated
by reference to Exhibit 10.16 to the 10-QSB filed by the Company on
December 6, 2005
|
||
10.24
|
Form
of Loan Agreement with the Elevation Fund, LLC
|
Incorporated
by reference to Exhibit 10.1 to the 8-K filed by the Company on August 18,
2005
|
||
10.25
|
Form
of Promissory Note with the Elevation Fund, LLC
|
Incorporated
by reference to Exhibit 10.2 to the 8-K filed by the Company on August 18,
2005
|
||
10.26
|
Form
of Common Stock Purchase Warrant with the Elevation Fund,
LLC
|
Incorporated
by reference to Exhibit 10.3 to the 8-K filed by the Company on August 18,
2005
|
||
10.27
|
Form
of Security Agreement with the Elevation Fund, LLC
|
Incorporated
by reference to Exhibit 10.4 to the 8-K filed by the Company on August 18,
2005
|
||
10.28
|
Form
of Common Stock Purchase Agreement with Doug Froese
|
Incorporated
by reference to Exhibit 10.5 to the 8-K filed by the Company on November
29, 2005
|
||
10.29
|
Form
of Investors Rights Agreement with Doug Froese
|
Incorporated
by reference to Exhibit 10.6 to the 8-K filed by the Company on November
29, 2005
|
||
10.30
|
Form
of Right of First Refusal Agreement with Doug Froese
|
Incorporated
by reference to Exhibit 10.8 to the 8-K filed by the Company on November
29, 2005
|
||
10.31
|
Form
of Covenant to Adjust with Doug Froese
|
Incorporated
by reference to Exhibit 10.7 to the 8-K filed by the Company on November
29, 2005
|
||
10.32
|
Form
of Loan Agreement with Ji Y. Baek
|
Incorporated
by reference to Exhibit 10.1 to the 10-QSB filed by the Company on August
14, 2006
|
||
10.33
|
Form
of Loan Agreement with Leroy and Lois Goldman
|
Incorporated
by reference to Exhibit 10.1 to the 8-K filed by the Company on September
20, 2006
|
||
10.34
|
Form
of Loan Agreement with Arbor Malone, LLC
|
Incorporated
by reference to Exhibit 10.2 and 10.4 to the 8-K filed by the Company on
September 20, 2006 and Exhibit 10.1 to the 8-K/A filed by the Company on
September 21, 2006
|
||
10.35
|
Form
of Loan Agreement with Ji Y. Baek
|
Incorporated
by reference to Exhibit 10.3 to the 8-K filed by the Company on September
20, 2006
|
||
10.36
|
Form
of Employment Agreement with Gary De Laurentiis
|
Incorporated
by reference to Exhibit 10.5 to the 8-K filed by the Company on September
20, 2006
|
||
10.37
|
Form
of Employment Agreement with Rodney S. Rougelot
|
Incorporated
by reference to Exhibit 10.6 to the 8-K filed by the Company on September
20, 2006
|
||
10.38
|
Form
of Settlement and Release Agreement with Rose Waste Systems, Inc. and
George Gitschel.
|
Incorporated
by reference to Exhibit 10.7 to the 8-K filed by the Company on September
20, 2006
|
||
10.39
|
Form
of Employment Agreement with Mario Sandoval
|
Incorporated
by reference to Exhibit 10.1 to the 8-K filed by the Company on October
23, 2006
|
||
10.40
|
Form
of Honeywell Patent License Agreement Amendment 4
|
Incorporated
by reference to Exhibit 10.1 to the 10-QSB filed by the Company on
November 20, 2006
|
||
10.41
|
Form
of Funding Agreement with Itec Capital Group, LLC
|
Incorporated
by reference to Exhibit 10.2 to the 10-QSB filed by the Company on
November 20, 2006
|
||
10.42
|
Form
of Mutual Settlement and Release Agreement with Excipio Group,
S.A.
|
Incorporated
by reference to Exhibit 10.3 to the 10-QSB filed by the Company on
November 20, 2006
|
||
10.43
|
Form
of Service Agreement with TSG, LLC
|
Incorporated
by reference to Exhibit 10.4 to the 10-QSB filed by the Company on
November 20, 2006
|
||
10.44
|
Form
of Engagement Agreement with KW Securities Corp.
|
Attached.
Referenced to Exhibit 10.5 to the 10-QSB filed by the Company on November
20, 2006.
|
||
10.45
|
Form
of Restricted Stock Agreement with Rodney S. Rougelot
|
Incorporated
by reference to Exhibit 10.1 to the 8-K filed by the Company on January 5,
2007.
|
||
10.46 | Form of Consulting Services Agreement with The Otto Law Group, PLLC | Incorporated by reference to Exhibit 10.1 to the S-8 filed by the Company on March 31, 2008. | ||
10.47 | Form of Consulting Services Agreement with Gaspers Electric | Incorporated by reference to Exhibit 10.1 to the S-8 filed by the Company on March 31, 2008. | ||
10.48 | Form of Consulting Services Agreement with Ladco Electric | Incorporated by reference to Exhibit 10.1 to the S-8 filed by the Company on March 31, 2008. | ||
10.49 | Form of Consulting Services Agreement with Millerick Engineering | Incorporated by reference to Exhibit 10.1 to the S-8 filed by the Company on March 31, 2008. | ||
10.50 | Form of Consulting Services Agreement with Vertec Biosolvents | Incorporated by reference to Exhibit 10.1 to the S-8 filed by the Company on March 31, 2008. | ||
14
|
Code
of Ethics
|
Incorporated
by reference to Exhibit 14 to the 10-KSB filed by the Company on April 15,
2005.
|
||
14.1 | Revised Code of Ethics | Attached | ||
23.1
|
Consent
of Salberg & Company, P.A.
|
Attached | ||
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act | Attached | ||
32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act | Attached | ||
99.1
|
Audit
and Finance Committee Charter
|
Incorporated
by reference to Exhibit 99.1 to the 10-KSB filed by the Company on April
15, 2005
|
||
99.2
|
Compensation
and Nominating Committee Charter
|
Incorporated
by reference to Exhibit 99.2 to the 10-KSB filed by the Company on April
15, 2005
|
||
99.3
|
Policy
Governing Director Nominations and Security Holder-Board
Communications
|
Incorporated
by reference to Exhibit 99.3 to the 10-KSB filed by the Company on April
15, 2005
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Balance
Sheet
|
F-2
|
Statements
of Operations
|
F-3
|
Statement
of Changes in Stockholders’ Equity (Deficit)
|
F-4
|
Statements
of Cash Flows
|
F-5
|
Notes
to Financial Statements
|
F-6
|
ECO2
Plastics, Inc.
|
||||
Balance
Sheet
|
||||
December
31, 2007
|
||||
(in
thousands, except share and per share data)
|
||||
Current
assets
|
||||
Cash
and cash equivalents
|
$ |
101
|
||
Accounts
receivable, net of allowance of $48
|
581
|
|||
Inventory
|
475
|
|||
Prepaid
expenses and other current assets
|
2
|
|||
Total
current assets
|
1,159
|
|||
Property
and equipment, net
|
7,864
|
|||
Deferred
debt issue costs, net
|
445
|
|||
Other
assets
|
47
|
|||
Total
assets
|
$ |
9,515
|
||
Current
liabilities
|
||||
Accounts
payable
|
$ |
2,900
|
||
Accounts
payable to related parties
|
692
|
|||
Accrued
liabilities
|
645
|
|||
Accrued
interest on notes payable
|
||||
Due
to related parties
|
846
|
|||
Due
to others
|
801
|
|||
Notes
and convertible notes payable, net of debt discount
|
||||
Due
to related parties, net of debt discount of $1,856
|
7,415
|
|||
Due
to others, net of debt discount of $2,558
|
5,910
|
|||
Current
portion of note payable to California Integrated Waste Management
Board
|
200
|
|||
Participation
Certificates obligations issued prior to 2004
|
354
|
|||
Total
current liabilities
|
19,763
|
|||
Note
payable to California Integrated Waste Management Board, net of current
portion
|
1,507
|
|||
Total
liabilities
|
21,270
|
|||
Commitments
and contingencies (Note 12)
|
||||
Stockholders'
deficit
|
||||
Preferred
stock, $0.001 par value, 10,000,000 shares authorized, none issued and
outstanding
|
-
|
|||
Common
stock, $0.001 par value, 750,000,000 shares authorized,
|
||||
190,920,594
shares issued and outstanding
|
191
|
|||
7,180,000
shares issuable
|
7
|
|||
Additional
paid-in capital
|
66,843
|
|||
Deferred
stock-based consulting
|
(24)
|
|||
Accumulated
deficit
|
(78,772)
|
|||
Total
stockholders' deficit
|
(11,755)
|
|||
Total
liabilities and stockholders' deficit
|
$ |
9,515
|
||
ECO2
Plastics, Inc.
|
||||||||
Statements
of Operations
|
||||||||
(in
thousands, except per share data)
|
||||||||
Year
ended December 31,
|
||||||||
2007
|
2006
|
|||||||
Revenue
|
$ | 4,339 | $ | 61 | ||||
Cost
of goods sold
|
4,220 | 50 | ||||||
Gross
profit
|
119 | 11 | ||||||
Operating
expenses
|
||||||||
Plant
operations and technology development
|
6,877 | 2,008 | ||||||
General
and administrative, including share-based
|
||||||||
payments
expense of $5,987 and $10,045
|
9,273 | 12,943 | ||||||
Total
operating expenses
|
16,150 | 14,951 | ||||||
Loss from
operations
|
(16,031 | ) | (14,940 | ) | ||||
Other
income (expense)
|
||||||||
Interest
expense, including amortization of debt discount
|
||||||||
and
debt issue costs of $14,868 and $4,077
|
(16,595 | ) | (4,740 | ) | ||||
Gain
on extinguishment of debt
|
- | 117 | ||||||
Change
in fair value liability of warrants and derivatives
|
- | (1,197 | ) | |||||
Total
other income (expense)
|
(16,595 | ) | (5,820 | ) | ||||
Loss
before income taxes
|
(32,626 | ) | (20,760 | ) | ||||
Income
taxes
|
- | - | ||||||
Net
loss
|
$ | (32,626 | ) | $ | (20,760 | ) | ||
Net
loss per share, basic and diluted
|
$ | (0.21 | ) | $ | (0.25 | ) | ||
Weighted
average shares used in computing
|
||||||||
net
loss per share, basic and diluted
|
152,660 | 84,387 | ||||||
ECO2
Plastics, Inc.
|
||||||||||||||||||||||||||
Statement
of Changes in Stockholders' Equity (Deficit)
|
||||||||||||||||||||||||||
For
the Years Ended December 31, 2007 and 2006
|
||||||||||||||||||||||||||
(in
thousands, except share data)
|
||||||||||||||||||||||||||
Common
Stock
|
Additional
|
Deferred
|
||||||||||||||||||||||||
Common
stock
|
Issuable
|
paid-in
|
stock-based
|
Accumulated
|
||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
consulting
|
deficit
|
Total
|
|||||||||||||||||||
Balance
at December 31, 2005
|
62,325,024 | $ | 63 | - | $ | - | $ | 19,357 | $ | (508 | ) | $ | (25,386 | ) | $ | (6,474 | ) | |||||||||
Issuance
of shares and reclassification from temporary
|
||||||||||||||||||||||||||
equity
for common stock price reduction contingency
|
752,731 | 1 | 164 | 165 | ||||||||||||||||||||||
Increase
in additional paid-in capital upon repayment
|
||||||||||||||||||||||||||
of
convertible debt with embedded derivative
|
168 | 168 | ||||||||||||||||||||||||
Increase
in additional paid-in capital upon conversion
|
||||||||||||||||||||||||||
of
convertible debt with embedded derivative
|
34 | 34 | ||||||||||||||||||||||||
Reclassification
of fair value liability for warrants and
|
||||||||||||||||||||||||||
embedded
options upon repayment of certain notes
|
9,148 | 9,148 | ||||||||||||||||||||||||
Issuance
of shares on exercise of warrants
|
8,757,142 | 9 | - | 9 | ||||||||||||||||||||||
Contribution
of warrants for assignment
|
413 | 413 | ||||||||||||||||||||||||
Reclassification
of fair value liability for warrants assigned
|
(413 | ) | (413 | ) | ||||||||||||||||||||||
Stock
issue costs
|
(82 | ) | (82 | ) | ||||||||||||||||||||||
Value
of beneficial conversion feature and warrants
|
||||||||||||||||||||||||||
issued
with borrowings after August 18, 2006
|
7,405 | 7,405 | ||||||||||||||||||||||||
Share-based
payments -
|
||||||||||||||||||||||||||
Shares
issued and issuable for services
|
13,464,824 | 13 | 9,036,923 | 9 | 2,774 | 2,796 | ||||||||||||||||||||
Warrants
issuable for services
|
2,902 | 2,902 | ||||||||||||||||||||||||
Shares
issued for executive compensation
|
26,400,000 | 26 | 3,862 | 3,888 | ||||||||||||||||||||||
Shares
issuable for executive compensation
|
6,046,792 | 6 | 841 | 847 | ||||||||||||||||||||||
Warrants
issuable for executive compensation
|
1,775 | 1,775 | ||||||||||||||||||||||||
Amortization
of deferred stock-based compensation
|
508 | 508 | ||||||||||||||||||||||||
Issuances
of shares and warrants for settlements
|
2,564,103 | 2 | 399 | 401 | ||||||||||||||||||||||
Net
loss
|
(20,760 | ) | (20,760 | ) | ||||||||||||||||||||||
Balance
at December 31, 2006
|
114,263,824 | 114 | 15,083,715 | 15 | 48,747 | - | (46,146 | ) | 2,730 | |||||||||||||||||
Issuance
of shares recorded as issuable in 2006
|
15,083,715 | 15 | (15,083,715 |
)
|
(15 | ) | - | |||||||||||||||||||
Value
of warrants issued with notes payable
|
8,961 | 8,961 | ||||||||||||||||||||||||
Shares
issued for warrant exercises
|
4,119,596 | 4 | (2 | ) | 2 | |||||||||||||||||||||
Shares
issued upon conversion of notes payable
|
||||||||||||||||||||||||||
and
related accrued interest
|
32,730,740 | 33 | 3,159 | 3,192 | ||||||||||||||||||||||
Share
based payments -
|
||||||||||||||||||||||||||
Shares
issued and issuable for services
|
4,890,411 | 5 | 180,000 | - | 900 | (24 | ) | 881 | ||||||||||||||||||
Warrants
issued for services
|
279 | 279 | ||||||||||||||||||||||||
Warrants
issued for executive compensation
|
204 | 204 | ||||||||||||||||||||||||
Shares
vested for executive compensation
|
13,240,000 | 13 | (13 | ) | - | |||||||||||||||||||||
Shares
issued for executive compensation
|
1,100,000 | 1 | 291 | 292 | ||||||||||||||||||||||
Shares
issuable for executive compensation
|
7,000,000 | 7 | 402 | 409 | ||||||||||||||||||||||
Shares
issued for accrued compensation
|
492,308 | 1 | 132 | 133 | ||||||||||||||||||||||
Shares
issued for settlement
|
5,000,000 | 5 | 670 | 675 | ||||||||||||||||||||||
Stock-based
compensation expense
|
3,115 | 3,115 | ||||||||||||||||||||||||
Net
loss
|
(32,626 | ) | (32,626 | ) | ||||||||||||||||||||||
Balance
at December 31, 2007
|
190,920,594 | $ | 191 | 7,180,000 | $ | 7 | $ | 66,843 | $ | (24 | ) | $ | (78,772 | ) | $ | (11,755 | ) |
ECO2
Plastics, Inc.
|
||||||||
Statements
of Cash Flows
|
||||||||
(in
thousands)
|
||||||||
Year
ended December 31,
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (32,626 | ) | $ | (20,760 | ) | ||
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
||||||||
Depreciation
and amortization
|
1,135 | 551 | ||||||
Gain
on extinguishment of debt
|
- | 117 | ||||||
Change
in fair value of warrants and derivatives
|
- | 1,197 | ||||||
Share-based
payments expense
|
5,312 | 10,045 | ||||||
Amortization
of debt issue costs and discount
|
14,868 | 4,077 | ||||||
Provision
for settlement paid in common stock
|
675 | 401 | ||||||
Provision for doubtful accounts | 48 | - | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(628 | ) | - | |||||
Inventory
|
(262 | ) | (145 | ) | ||||
Prepaid
expenses and deposits
|
50 | (44 | ) | |||||
Accounts
payable
|
2,590 | 228 | ||||||
Accrued
liabilities
|
1,538 | 307 | ||||||
Other
|
106 | (41 | ) | |||||
Net
cash used by operating activities
|
(7,194 | ) | (4,067 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Purchase
of property, plant & equipment
|
(3,201 | ) | (3,638 | ) | ||||
Net
cash used by investing activities
|
(3,201 | ) | (3,638 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Decrease
in restricted cash in CIWMB escrow
|
- | 58 | ||||||
Payments
on CIWMB note payable
|
(191 | ) | (93 | ) | ||||
Proceeds
from issuance of notes payable
|
11,057 | 9,755 | ||||||
Principal
payments on notes payable
|
(300 | ) | (1,200 | ) | ||||
Proceeds
from exercise of warrants
|
2 | - | ||||||
Payments
of debt issue costs
|
(169 | ) | (750 | ) | ||||
Net
cash provided by financing activities
|
10,399 | 7,770 | ||||||
Net
increase in cash and cash equivalents
|
4 | 65 | ||||||
Cash
and cash equivalents, beginning of period
|
97 | 32 | ||||||
Cash
and cash equivalents, end of period
|
$ | 101 | $ | 97 | ||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
paid for interest
|
$ | 78 | $ | 281 | ||||
Cash
paid for income taxes
|
$ | - | $ | - | ||||
Supplemental
disclosures of non-cash investing and financing
activities:
|
||||||||
Debt
discounts
|
$ | 8,413 | $ | 10,939 | ||||
Deferred
Debt issue costs
|
$ | 82 | $ | 2,962 | ||||
Reclassification
of fair value of derivative liabilities to equity
|
$ | - | $ | 6,918 | ||||
Common
stock issued for debt conversion or settlement
|
$ | 3,116 | $ | 279 | ||||
Net
assets and liabilities settled with common stock
|
$ | 750 | $ | 619 | ||||
Reclassification
of fair value of warrrant to derivative liability
|
$ | - | $ | 413 | ||||
Raw
materials
|
$ | 263 | ||
Work-in-process
|
11 | |||
Finished
goods
|
201 | |||
Total
|
$ | 475 |
Furniture
and equipment
|
$ | 265 | ||
Recycling
plant and construction in progress
|
9,390 | |||
Total
property and equipment
|
9,655 | |||
Less
accumulated depreciation and amortization
|
(1,791 | ) | ||
Property
and equipment, net
|
$ | 7,864 |
Note
payable to CIWMB
|
$ | 1,715 | ||
Debt
discount, net of amortization
|
(8 | ) | ||
1,707 | ||||
Less
current portion
|
200 | |||
Note
payable to CIWMB, net of discount and net of current
portion
|
$ | 1,507 |
Notes
|
Unamortized
debt discount
|
Notes,
net of debt discount
|
Accrued
interest
|
|||||||||||||
Subordinated
Convertible Notes
|
$ | 292 | $ | - | $ | 292 | $ | 58 | ||||||||
Director
Notes
|
2,351 | - | 2,351 | 127 | ||||||||||||
Short-term
Notes
|
2,162 | (1,100 | ) | 1,062 | 39 | |||||||||||
Private
Placement Convertible Notes
|
12,934 | (3,314 | ) | 9,620 | 1,423 | |||||||||||
Total
|
$ | 17,739 | $ | (4,414 | ) | $ | 13,325 | $ | 1,647 |
Due
to related parties
|
$ | 9,271 | $ | (1,856 | ) | $ | 7,415 | $ | 846 | |||||||
Due
to others
|
8,468 | ( 2,558 | ) | 5,910 | 801 | |||||||||||
Total
|
$ | 17,739 | $ | ( 4,414 | ) | $ | 13,325 | $ | 1,647 |
Outstanding
|
Weighted
average exercise price
|
Weighted
average remaining contractual life in years
|
Aggregate
intrinsic value (in thousands)
|
|||||||||||||
Balance
at December 31, 2005
|
13,478,439 | $ | 0.02 | 8.6 | $ | 1,350 | ||||||||||
Granted
|
55,180,000 | 0.09 | ||||||||||||||
Exercised
|
(8,800,000 | ) | 0.002 | |||||||||||||
Balance
at December 31, 2006
|
59,858,439 | 0.09 | 5.8 | $ | 3,518 | |||||||||||
Granted
|
68,746,817 | 0.08 | ||||||||||||||
Exercised
|
(5,198,439 | ) | 0.06 | |||||||||||||
Balance
at December 31, 2007
|
123,406,817 | $ | 0.09 | 6.2 | $ | 962 |
Outstanding
|
Weighted
average exercise price
|
Weighted
average remaining contractual life in years
|
Aggregate
intrinsic value (in thousands)
|
|||||||||||||
Balance
at December 31, 2005
|
5,782,121 | $ | 0.05 | 5.3 | $ | 410 | ||||||||||
Granted
|
26,412,750 | 0.09 | ||||||||||||||
Balance
at December 31, 2006
|
32,194,871 | 0.08 | 7.4 | $ | 2,491 | |||||||||||
Granted
|
382,429 | 0.08 | ||||||||||||||
Exercised
|
(850,000 | ) | 0.001 | |||||||||||||
Exercised/
Cancelled
|
(12,121 | ) | 29.70 | |||||||||||||
Balance
at December 31, 2007
|
31,715,179 | $ | 0.08 | 5.9 | $ | 220 |
Outstanding
|
Weighted
average exercise price
|
Weighted
average remaining contractual life in years
|
Aggregate
intrinsic value (in thousands)
|
|||||||||||||
Balance
at December 31, 2005
|
19,850,000 | $ | 0.06 | 9.7 | $ | 1,191 | ||||||||||
Granted
|
12,000,000 | 0.10 | ||||||||||||||
Balance
at December 31, 2006
|
31,850,000 | 0.07 | 9.2 | $ | 2,416 | |||||||||||
Granted
|
5,725,000 | 0.13 | ||||||||||||||
Exercised/
Cancelled
|
(10,000,000 | ) | 0.10 | |||||||||||||
Balance
at December 31, 2007
|
31,715,179 | $ | 0.09 | 5.6 | $ | 151 |
Outstanding
|
Weighted
average exercise price
|
Weighted
average remaining contractual life in years
|
Aggregate
intrinsic value (in thousands)
|
|||||||||||||
Balance
at December 31, 2005
|
39,110,560 | $ | 0.05 | 8.3 | $ | 2,951 | ||||||||||
Granted
|
93,592,750 | 0.08 | ||||||||||||||
Exercised
|
(8,800,000 | ) | 0.002 | |||||||||||||
Balance
at December 31, 2006
|
123,903,310 | 0.08 | 6.9 | $ | 8,425 | |||||||||||
Granted
|
74,854,246 | 0.08 | ||||||||||||||
Exercised
|
(6,048,439 | ) | 0.06 | |||||||||||||
Exercised/
Cancelled
|
(10,012,121 | ) | 0.14 | |||||||||||||
Balance
at December 31, 2007
|
182,696,996 | $ | 0.09 | 6.1 | $ | 1,333 |
Range
of exercise prices
|
Shares
|
Weighted
average remaining life
|
Weighted
average exercise price
|
||||||
$0.001 | 60,000 |
3.7
years
|
$0.001 | ||||||
$0.05 | 1,100,000 |
2.5
years
|
0.05 | ||||||
$0.06 | 130,700,972 |
7.8
years
|
0.06 | ||||||
$0.09 - $ 0.11 | 16,451,249 |
6.3
years
|
0.10 | ||||||
$0.12 - $0.13 | 33,584,775 |
2.8
years
|
0.12 | ||||||
$0.19 - $0.25 | 800,000 |
3.0
years
|
0.21 | ||||||
182,696,996 |
6.1
years
|
$0.09 |
2007
|
2006
|
|||||||
Deferred
tax assets
|
||||||||
Net
operating loss carryforward
|
$ | 12,788 | $ | 8,174 | ||||
Accrued
liabilities due to related parties
|
235 | 216 | ||||||
Total
deferred tax assets
|
13,023 | 8,390 | ||||||
Deferred
tax liabilities - property and equipment
|
(228 | ) | (10 | ) | ||||
Net
deferred tax assets before valuation allowance
|
12,795 | 8,380 | ||||||
Valuation
allowance
|
(12,795 | ) | (8,380 | ) | ||||
Net
deferred tax assets
|
$ | - | $ | - |
2007
|
2006
|
|||||||
Income
tax benefit computed at statutory rate
|
(34 | %) | (34 | %) | ||||
State
income tax benefit, net of federal benefit
|
(3 | %) | (2 | %) | ||||
Nondeductible
stock-based compensation and other
|
21 | % | 21 | % | ||||
Valuation
allowance
|
16 | % | 15 | % | ||||
Effective
tax rate
|
0 | % | 0 | % |
Per
cent of total revenues
|
Per
cent of total accounts receivable
|
|||||||
Customer
1
|
40 | % | * | |||||
Customer
2
|
24 | % | 40 | % | ||||
Customer
3
|
15 | % | * | |||||
Customer
4
|
10 | % | 20 | % |
Actual
|
Note
Conversions
|
Shares
for Warants
|
Shares
for Services
|
Pro
Forma
|
||||||||||||||||
Total
Liabilities
|
$ | 21,270 | $ | (12,700 | ) | $ |
-
|
$ |
(754
|
)
|
$ | 7,816 | ||||||||
Total
stockholders’ equity (deficit)
|
(11,755 | ) | 12,700 |
-
|
754
|
1,699 | ||||||||||||||
Total
|
$ | 9,515 | $ | - | $ |
-
|
$ |
0
|
$ | 9,515 | ||||||||||
Shares
issued and issuable
|
198,101 | 243,000 |
82,000
|
19,000
|
542,101 | |||||||||||||||
Warrants issued and issuable | 182,697 | (39,000 | ) |
(124,000
|
) |
-
|
19,697 |