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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Enova Systems Inc (CE) | USOTC:ENVS | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
|
For the quarterly period ending September 30, 2013
|
|
For the transition period from _____________ to
______________
|
California
|
95-3056150
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification Number)
|
Large accelerated filer
|
[ ]
|
Accelerated filer
|
[ ]
|
Non-accelerated filer
|
[ ]
|
Smaller reporting company
|
[X]
|
PART I — FINANCIAL INFORMATION
|
Page
|
||
1
|
|||
1
|
|||
2
|
|||
3
|
|||
4
|
|||
12
|
|||
20
|
|||
20
|
|||
PART II — OTHER INFORMATION
|
|||
22
|
|||
23
|
|||
23
|
|||
23
|
|||
23
|
|||
23
|
|||
23
|
|||
24 |
September 30,
2013
|
December 31, 2012
(audited)
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
-
|
$
|
57,000
|
||||
Accounts receivable, net
|
136,000
|
208,000
|
||||||
Inventories and supplies, net
|
871,000
|
2,203,000
|
||||||
Prepaid expenses and other current assets
|
87,000
|
242,000
|
||||||
Total current assets
|
1,094,000
|
2,710,000
|
||||||
Long term accounts receivable
|
18,000
|
38,000
|
||||||
Property and equipment, net
|
95,000
|
307,000
|
||||||
Total assets
|
$
|
1,207,000
|
$
|
3,055,000
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Bank overdraft | $ | 2,000 | $ | - | ||||
Accounts payable
|
|
643,000
|
|
558,000
|
||||
Loans from employees
|
19,000
|
-
|
||||||
Deferred revenues
|
213,000
|
118,000
|
||||||
Accrued payroll and related expenses
|
162,000
|
98,000
|
||||||
Accrued loss for litigation settlement
|
2,014,000
|
2,014,000
|
||||||
Other accrued liabilities
|
217,000
|
255,000
|
||||||
Current portion of notes payable
|
56,000
|
66,000
|
||||||
Total current liabilities
|
3,326,000
|
3,109,000
|
||||||
Accrued interest payable
|
1,380,000
|
1,318,000
|
||||||
Notes payable, net of current portion
|
1,241,000
|
1,262,000
|
||||||
Total liabilities
|
5,947,000
|
5,689,000
|
||||||
Stockholders' deficit:
|
||||||||
Series A convertible preferred stock — no par value, 30,000,000 shares authorized; 0 shares issued and outstanding; liquidating preference at $0.60 per share as of September 30, 2013 and December 31, 2012
|
-
|
-
|
||||||
Series B convertible preferred stock — no par value, 5,000,000 shares authorized; 546,000 shares issued and outstanding; liquidating preference at $2 per share as of September 30, 2013 and December 31, 2012
|
1,094,000
|
1,094,000
|
||||||
Common Stock to be issued | 528,000 | 528,000 | ||||||
Common Stock — no par value, 750,000,000 shares authorized; 44,520,000 shares issued and outstanding as of September 30, 2013 and December 31, 2012
|
145,512,000
|
145,512,000
|
||||||
Additional paid-in capital
|
9,589,000
|
9,579,000
|
||||||
Accumulated deficit
|
(161,463,
000
|
)
|
(159,347,000
|
)
|
||||
Total stockholders' deficit
|
(4
,740,000
|
)
|
(2,634,000)
|
|||||
Total liabilities and stockholders' deficit
|
$
|
1,207,000
|
$
|
3,055,000
|
Three Months Ended September 30
|
Nine Months Ended September 30
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenues
|
$
|
140,000
|
$
|
152,000
|
$
|
425,000
|
$
|
1,055,000
|
||||||||
Cost of revenues
|
1,179,000
|
140,000
|
1,660,000
|
1,722,000
|
||||||||||||
Gross income (loss)
|
(1,039,000
|
)
|
12,000
|
(1,235,000
|
)
|
(667,000
|
)
|
|||||||||
Operating expenses
|
||||||||||||||||
Research and development
|
-
|
1,000
|
-
|
805,000
|
||||||||||||
Selling, general & administrative
|
216,000
|
731,000
|
754,000
|
3,129,000
|
||||||||||||
Total operating expenses
|
216,000
|
732,000
|
754,000
|
3,934,000
|
||||||||||||
Operating loss
|
(1,255,000
|
)
|
(720,000
|
)
|
(1,989,000
|
)
|
(3,881,000
|
)
|
||||||||
Other income and (expense)
|
||||||||||||||||
Interest and other income (expense)
|
(115,000)
|
(29,000
|
)
|
(127,000
|
)
|
(150,000
|
)
|
|||||||||
Total other income and (expense)
|
(115,000)
|
(29,000
|
)
|
(127,000
|
)
|
(150,000
|
)
|
|||||||||
Net loss
|
$
|
(1,370,000
|
)
|
$
|
(749,000
|
)
|
$
|
(2,116,000
|
)
|
$
|
(4,751,000
|
)
|
||||
Basic and diluted loss per share
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
$
|
(0.05
|
)
|
$
|
(0.11)
|
|||||
Weighted average number of common shares outstanding
|
44,520,000
|
44,520,000
|
44,520,000
|
43,757,000
|
Nine Months Ended
|
||||||||
September 30
|
||||||||
2013
|
2012
|
|||||||
Net loss
|
$
|
(2,116,000
|
)
|
$
|
(4,751,000
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Reserve for doubtful accounts
|
(46,000
|
)
|
197,000
|
|||||
Inventory reserve
|
1,207,000
|
945,000
|
||||||
Depreciation and amortization
|
114,000
|
351,000
|
||||||
Loss on disposal of fixed assets
|
4,000
|
-
|
||||||
Loss on asset impairment
|
45,000
|
68,000
|
||||||
Stock option expense
|
10,000
|
169,000
|
||||||
(Increase) decrease in:
|
||||||||
Accounts receivable
|
118,000
|
240,000
|
||||||
Inventory and supplies
|
125,000
|
231,000
|
||||||
Prepaid expenses and other current assets
|
155,000
|
94,000
|
||||||
Long term receivables
|
20,000
|
6,000
|
||||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
85,000
|
(121,000
|
)
|
|||||
Loans from employees
|
19,000
|
-
|
||||||
Deferred revenues
|
95,000
|
(302,000
|
)
|
|||||
Accrued payroll and related expense
|
64,000
|
(163,000
|
)
|
|||||
Other accrued liabilities
|
(38,000
|
)
|
(112,000
|
)
|
||||
Accrued interest payable
|
62,000
|
61,000
|
||||||
Net cash used in operating activities
|
(77,000
|
)
|
(3,087,000
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Proceeds from the sale of fixed assets
|
29,000
|
-
|
||||||
Purchases of property and equipment
|
-
|
(16,000
|
)
|
|||||
Net cash provided by (used) in investing activities
|
29,000
|
(16,000
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from bank overdraft | 2,000 | - | ||||||
Payment on notes payable
|
(11,000
|
)
|
(17,000
|
)
|
||||
Net proceeds from the issuance of common stock
|
- |
|
132,000
|
|||||
Net cash provided by (used in) financing activities
|
(9,000
|
)
|
115,000
|
|||||
Net decrease in cash and cash equivalents
|
(57,000
|
)
|
(2,988,000
|
)
|
||||
Cash and cash equivalents, beginning of period
|
57,000
|
3,096,000
|
||||||
Cash and cash equivalents, end of period
|
$
|
-
|
$
|
108,000
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest paid
|
$
|
1,000
|
$
|
4,000
|
||||
Supplemental disclosure of non cash investing and financing: | ||||||||
Shares issued for services
|
$
|
-
|
$
|
62,000
|
|
1.
|
Description of the Company and its Business
|
|
2.
|
Summary of Significant Accounting Policies
|
|
•
|
Persuasive Evidence of an Arrangement —
The Company documents all terms of an arrangement in a written contract signed by the customer prior to recognizing revenue.
|
|
•
|
Delivery Has Occurred or Services Have Been Rendered —
The Company performs all services or delivers all products prior to recognizing revenue. Professional consulting and engineering services are considered to be performed when the services are complete. Equipment is considered delivered upon delivery to a customer’s designated location. In certain instances, the customer elects to take title upon shipment.
|
|
•
|
The Fee for the Arrangement is Fixed or Determinable —
Prior to recognizing revenue, a customer’s fee is either fixed or determinable under the terms of the written contract. Fees for professional consulting services, engineering services and equipment sales are fixed under the terms of the written contract. The customer’s fee is negotiated at the outset of the arrangement and is not subject to refund or adjustment during the initial term of the arrangement.
|
|
•
|
Collectability is Reasonably Assured —
The Company determines that collectability is reasonably assured prior to recognizing revenue. Collectability is assessed on a customer-by-customer basis based on criteria outlined by management. New customers are subject to a credit review process which evaluates the customer’s financial position and ultimately its ability to pay. The Company does not enter into arrangements unless collectability is reasonably assured at the outset. Existing customers are subject to ongoing credit evaluations based on payment history and other factors. If it is determined during the arrangement that collectability is not reasonably assured, revenue is recognized on a cash basis. Amounts received upfront for engineering or development fees under multiple-element arrangements are deferred and recognized over the period of committed services or performance, if such arrangements require the Company to provide on-going services or performance. All amounts received under collaborative research agreements or research and development contracts are nonrefundable, regardless of the success of the underlying research.
|
|
3.
|
Inventory
|
September 30,
2013
|
December 31,
2012
|
|||||||
Raw materials
|
$
|
3,144,000
|
$
|
3,988,000
|
||||
Work in progress
|
222,000
|
2,000
|
||||||
Finished goods
|
472,000
|
587,000
|
||||||
Reserve for obsolescence
|
(2,967,000
|
)
|
(2,374,000
|
)
|
||||
Total
|
$
|
871,000
|
$
|
2,203,000
|
|
4.
|
Property and Equipment
|
September 30,
2013
|
December 31,
2012
|
|||||||
Computers and software
|
$
|
59,000
|
$
|
580,000
|
||||
Machinery and equipment
|
251,000
|
535,000
|
||||||
Furniture and office equipment
|
86,000
|
87,000
|
||||||
Demonstration vehicles and buses
|
423,000
|
675,000
|
||||||
Leasehold improvements
|
-
|
1,327,000
|
||||||
819,000
|
3,204,000
|
|||||||
Less accumulated depreciation and amortization
|
(724,000
|
)
|
(2,897,000
|
)
|
||||
Total
|
$
|
95,000
|
$
|
307,000
|
|
5.
|
Other Accrued Liabilities
|
September 30,
2013
|
December 31,
2012
|
|||||||
Accrued inventory received
|
$
|
10,000
|
$
|
14,000
|
||||
Accrued professional services
|
86,000
|
45,000
|
||||||
Accrued warranty
|
96,000
|
117,000
|
||||||
Other
|
25,000
|
79,000
|
||||||
Total
|
$
|
217,000
|
$
|
255,000
|
2013
|
2012
|
|||||||
Balance at beginning of year
|
$
|
117,000
|
$
|
227,000
|
||||
Accruals for warranties issued during the period
|
96,000
|
94,000
|
||||||
Warranty claims
|
(117,000
|
)
|
(216,000
|
)
|
||||
Balance at end of quarter
|
$
|
96,000
|
$
|
105,000
|
2013
|
2012
|
|||||||
Balance at beginning of quarter
|
$
|
111,000
|
$
|
140,000
|
||||
Accruals for warranties issued during the period
|
39,000
|
14,000
|
||||||
Warranty claims
|
(54,000
|
)
|
(49,000
|
)
|
||||
Balance at end of quarter
|
$
|
96,000
|
$
|
105,000
|
|
6.
|
Notes Payable, Long-Term Debt and Other Financing
|
September 30,
2013
|
December 31,
2012
|
|||||||
Secured note payable to Credit Managers Association of California, bearing interest at prime plus 3% (6.25% as of September 30, 2013), and is adjusted annually in April through maturity. Principal and unpaid interest due in April 2016. A sinking fund escrow may be funded with 10% of future equity financing, as defined in the Agreement
|
$
|
1,238,000
|
$
|
1,238,000
|
||||
Secured note payable to a Coca Cola Enterprises in the original amount of $40,000, bearing interest at 10% per annum. Principal and unpaid interest due on demand
|
40,000
|
40,000
|
||||||
Secured note payable to a financial institution in the original amount of $38,000, bearing interest at 8.25% per annum, payable in 60 equal monthly installments of principal and interest through February 19, 2014
|
5,000
|
11,000
|
||||||
Secured note payable to a financial institution in the original amount of $19,000, bearing interest at 10.50% per annum, payable in 60 equal monthly installments of principal and interest through August 25, 2014
|
5,000
|
8,000
|
||||||
Secured note payable to a financial institution in the original amount of $26,000, bearing interest at 7.91% per annum, payable in 60 equal monthly installments of principal and interest through April 9, 2015
|
9,000
|
14,000
|
||||||
Secured note payable to a financial institution in the original amount of $25,000, bearing interest at 7.24% per annum, payable in 60 equal monthly installments of principal and interest through March 10, 2016
|
-
|
17,000
|
||||||
1,297,000
|
1,328,000
|
|||||||
Less current portion of notes payable
|
(56,000
|
)
|
(66,000
|
)
|
||||
Notes payable, net of current portion
|
$
|
1,241,000
|
$
|
1,262,000
|
|
8.
|
Stockholders’ Equity
|
|
9.
|
Stock Options
|
Number of Share
Options
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term in Years
|
Aggregate
Intrinsic Value
(1)
|
|||||||||||||
Outstanding at December 31, 2012
|
810,000
|
$
|
0.64
|
4.06
|
$
|
—
|
||||||||||
Granted
|
4,400,000
|
$
|
0.02
|
2.91
|
$
|
—
|
||||||||||
Exercised
|
—
|
$
|
—
|
—
|
$
|
—
|
||||||||||
Forfeited or Cancelled
|
—
|
$
|
—
|
—
|
$
|
—
|
||||||||||
Outstanding at September 30, 2013
|
5,210,000
|
$
|
0.12
|
2.97
|
$
|
—
|
||||||||||
Exercisable at September 30, 2013
|
650,000
|
$
|
0.78
|
3.54
|
$
|
—
|
||||||||||
Vested and expected to vest
(2)
|
5,210,000
|
$
|
0.12
|
2.97
|
$
|
—
|
(1)
|
Aggregate intrinsic value represents the value of the closing price per share of our common stock on the last trading day of the fiscal period in excess of the exercise price multiplied by the number of options outstanding or exercisable, except for the “Exercised” line, which uses the closing price on the date exercised.
|
|||||||||||||||||
(2)
|
Number of shares includes options vested and those expected to vest net of estimated forfeitures.
|
Unvested
Number of
Options
|
Weighted
Average
Grant Date Fair
Value
|
|||||||
Unvested balance at December 31, 2012
|
236,000
|
$
|
0.04
|
|||||
Granted
|
4,400,000
|
$
|
0.02
|
|||||
Vested
|
(76,000
|
)
|
$
|
0.11
|
||||
Forfeited
|
—
|
$
|
—
|
|||||
Unvested balance at September 30, 2013
|
4,560,000
|
$
|
0.02
|
For the nine months ended
|
||||||||
September 30,
2013
|
September 30,
2012
|
|||||||
Expected life (in years) | 2 | 6.5 | ||||||
Average risk-free interest rate
|
1.66 | % | 1.66 | % | ||||
Expected volatility
|
111 | % | 108 | % | ||||
Expected dividend yield
|
0 | % | 0 | % | ||||
Forfeiture rate
|
3 | % | 3 | % |
Number of
Share
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
|
||||||||||
Outstanding at December 31, 2012
|
11,250,000
|
$
|
0.22
|
4.00
|
||||||||
Granted
|
—
|
$
|
—
|
—
|
||||||||
Exercised
|
—
|
$
|
—
|
—
|
||||||||
Forfeited or Cancelled
|
—
|
$
|
—
|
—
|
||||||||
Outstanding at September 30, 2013
|
11,250,000
|
$
|
0.22
|
3.25
|
||||||||
Exercisable at September 30, 2013
|
11,250,000
|
$
|
0.22
|
3.25
|
|
11.
|
Concentrations
|
Three Months Ended
September 30,
|
As a % of Revenues
September 30,
|
|||||||||||||||
2013
|
2012
|
% Change
|
2013
|
2012
|
||||||||||||
Revenues
|
$
|
140,000
|
$
|
152,000
|
-8
|
%
|
100
|
%
|
100
|
%
|
||||||
Cost of revenues
|
1,179,000
|
140,000
|
742
|
%
|
842
|
%
|
92
|
%
|
||||||||
Gross loss
|
( 1,039,000 )
|
12,000
|
-8758
|
%
|
-742
|
%
|
8
|
%
|
||||||||
Operating expenses
|
||||||||||||||||
Research and development
|
-
|
1,000
|
-100
|
%
|
0
|
%
|
1
|
%
|
||||||||
Selling, general & administrative
|
216,000
|
731,000
|
-70
|
%
|
154
|
%
|
481
|
%
|
||||||||
Total operating expenses
|
216,000
|
732,000
|
-70
|
%
|
154
|
%
|
482
|
%
|
||||||||
Operating loss
|
(1,255,000
|
)
|
(720,000
|
)
|
-74
|
%
|
-896
|
%
|
-474
|
%
|
||||||
Other income (expense)
|
||||||||||||||||
Interest and other income (expense)
|
(115,000)
|
(29,000
|
)
|
297
|
%
|
-82
|
%
|
-19
|
%
|
|||||||
Total other income (expense)
|
(115,000)
|
(29,000
|
)
|
297
|
%
|
-82
|
%
|
-19
|
%
|
|||||||
Net loss
|
$
|
(1,370,000
|
)
|
$
|
(749,000
|
)
|
-83
|
%
|
-979
|
%
|
-493
|
%
|
Nine Months Ended
September 30,
|
As a % of Revenues
September 30,
|
|||||||||||||||
2013
|
2012
|
% Change
|
2013
|
2012
|
||||||||||||
Revenues
|
$
|
425,000
|
$
|
1,055,000
|
-60
|
%
|
100
|
%
|
100
|
%
|
||||||
Cost of revenues
|
1,660,000
|
1,722,000
|
-4
|
%
|
391
|
%
|
163
|
%
|
||||||||
Gross loss
|
(1,235,
000
|
) |
(667,000)
|
-85
|
%
|
-291
|
%
|
-63
|
%
|
|||||||
Operating expenses
|
||||||||||||||||
Research and development
|
-
|
805,000
|
-100
|
%
|
0
|
%
|
76
|
%
|
||||||||
Selling, general & administrative
|
754,000
|
3,129,000
|
-76
|
%
|
177
|
%
|
297
|
%
|
||||||||
Total operating expenses
|
754,000
|
3,934,000
|
-81
|
%
|
177
|
%
|
373
|
%
|
||||||||
Operating loss
|
(1,989,000
|
)
|
(4,601,000
|
)
|
-57
|
%
|
-468
|
%
|
-436
|
%
|
||||||
Other income (expense)
|
||||||||||||||||
Interest and other income (expense)
|
(127,000
|
)
|
(150,000
|
)
|
-15
|
%
|
-30
|
%
|
-14
|
%
|
||||||
Total other income (expense)
|
(127,000
|
)
|
(150,000
|
)
|
-15
|
%
|
-30
|
%
|
-14
|
%
|
||||||
Net loss
|
$
|
(2,116,000
|
)
|
$
|
(4,751,000
|
)
|
-55
|
%
|
-498
|
%
|
-450
|
%
|
a)
|
Exhibits
|
31.1
|
Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.*
|
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
101. XML
|
XBRL Instance Document**
|
101.XSD
|
XBRL Taxonomy Extension Schema Document**
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document**
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document**
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document**
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document**
|
1 Year Enova Systems (CE) Chart |
1 Month Enova Systems (CE) Chart |
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