ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
41-2233202
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
118 Pipemakers Circle
Suite 105
Pooler, Georgia 31322
|
|
(Address of principal executive offices, including zip code)
|
Page
|
||||
1
|
||||
2
|
||||
3
|
||||
4
|
||||
5-8
|
||||
9
|
||||
11
|
||||
12
|
||||
|
||||
12
|
||||
12
|
||||
13
|
||||
13
|
||||
13
|
||||
13
|
||||
14
|
Condensed Balance Sheets
|
||||||||
September 30,
2010
|
December 31,
2009
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current Assets
|
||||||||
Cash
|
$ | 2,414 | $ | 609 | ||||
Accounts Receivables
|
1,035 | 3,146 | ||||||
Inventory
|
140,298 | 1,121,705 | ||||||
Other Current Assets
|
17,280 | 42,529 | ||||||
Total Current Assets
|
161,027 | 1,167,989 | ||||||
Furniture & Equipment, net of accumulated depreciation
|
230,603 | 229,237 | ||||||
Other Assets
|
||||||||
Patents, net of accumulated amortization
|
587,865 | 566,072 | ||||||
Trademarks
|
164,110 | 144,672 | ||||||
Total Assets
|
$ | 1,143,605 | $ | 2,107,970 | ||||
Liabilities and Stockholders' Deficit
|
||||||||
Current Liabilities
|
||||||||
Checks Drawn In Excess of Bank Balance
|
- | 4,706 | ||||||
Accounts Payable
|
1,579,501 | 1,164,927 | ||||||
Accrued Expenses
|
197,545 | 106,855 | ||||||
Payroll Liabilities
|
244,647 | 64,634 | ||||||
Convertible Debt, current portion, net of discount $103,767 and $62,500, respectively
|
446,234 | 276,485 | ||||||
Notes Payable, current poriton
|
224,305 | - | ||||||
Notes Payable-Related parties, current poriton
|
61,650 | 266,761 | ||||||
Total Current Liabilities
|
2,753,882 | 1,884,368 | ||||||
Long-term Liabilities
|
||||||||
Accounts Payable, satisfied by common stock issuance
|
- | 400,000 | ||||||
Accrued expenses, satisfied by common stock issuance
|
- | 48,338 | ||||||
Convertible Debt, net of discount of $0 and $94,000, respectively, satisfied by common stock issuance
|
- | 66,000 | ||||||
Notes Payable-Related parties, satisfied by common stock issuance
|
- | 18,867 | ||||||
Convertible Debentures, net of discount $754,650 and $1,006,200, respectively
|
363,350 | 111,800 | ||||||
Total Long-term Liabilities
|
363,350 | 645,005 | ||||||
Stockholders' Deficit
|
||||||||
Preferred Stock, $0.0001 Par Value, 50,000,000 Shares Authorized, No Shares Issued or Outstanding
|
- | - | ||||||
Common Stock, $0.0001 Par Value, 900,000,000 Shares Authorized, 389,150,842 and 215,455,090 Shares Issued and Outstanding at September 30, 2010 and December 31, 2009, respectively
|
38,916 | 21,546 | ||||||
Additional Paid In Capital
|
19,981,473 | 13,875,015 | ||||||
Prepaid Loan Costs
|
- | (106,805 | ) | |||||
Accumulated Deficit
|
(21,994,016 | ) | (14,211,159 | ) | ||||
Total Stockholders' Deficit
|
(1,973,627 | ) | (421,403 | ) | ||||
Total Liabilities and Stockholders' Deficit
|
$ | 1,143,605 | $ | 2,107,970 |
Condensed Statements of Operations (Unaudited)
|
||||||||||||||||
For the three months ended September 30,
|
For the nine months ended September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Revenues
|
$ | 11,603 | $ | - | $ | 30,353 | $ | - | ||||||||
Cost of Goods Sold
|
10,091 | - | 33,422 | - | ||||||||||||
Gross Profit on Sales
|
$ | 1,512 | $ | - | $ | (3,069 | ) | $ | - | |||||||
Expenses
|
||||||||||||||||
Share Based Compensation
|
26,771 | 358,567 | 635,313 | 765,208 | ||||||||||||
Research and Development
|
24,226 | 153,897 | 273,316 | 478,470 | ||||||||||||
Other General and Administrative Expenses
|
466,231 | 844,872 | 2,806,374 | 3,565,433 | ||||||||||||
Total Expense
|
517,228 | 1,357,336 | 3,715,003 | 4,809,111 | ||||||||||||
Net Loss from Operations
|
(515,716 | ) | (1,357,336 | ) | (3,718,072 | ) | (4,809,111 | ) | ||||||||
Other (Expense) Income
|
||||||||||||||||
Interest Income
|
- | (2 | ) | - | ||||||||||||
Gain on AP Settlement
|
- | - | 31,987 | 149,339 | ||||||||||||
Inventory Impairment Write Down
|
(1,286,529 | ) | - | (1,286,529 | ) | - | ||||||||||
Interest Expense
|
(871,498 | ) | (864,978 | ) | (2,810,242 | ) | (1,163,320 | ) | ||||||||
Total Other (Expense) Income
|
(2,158,027 | ) | (864,980 | ) | (4,064,784 | ) | (1,013,981 | ) | ||||||||
Net Loss
|
$ | (2,673,743 | ) | $ | (2,222,316 | ) | $ | (7,782,856 | ) | $ | (5,823,092 | ) | ||||
Weighted Average Basic & Fully Diluted Outstanding Shares
|
389,150,842 | 177,912,005 | 268,520,004 | 172,251,094 | ||||||||||||
Basic & Fully Diluted Loss per Share
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.03 | ) |
Condensed Statements of Cash Flow (Unaudited)
|
||||||||
For the six months ended June 30
|
||||||||
2010
|
2009
|
|||||||
Operating activities
|
||||||||
Net loss
|
$ | (7,782,856 | ) | $ | (5,823,092 | ) | ||
Adjustments to reconcile net loss to net cash
|
||||||||
used by operating activities:
|
||||||||
Depreciation and amortization
|
38,295 | 15,922 | ||||||
Share based compensation
|
635,311 | 760,782 | ||||||
Amortization of detachable warrants issued with convertible debt
|
458,710 | 891,096 | ||||||
Amortization of the beneficial conversion feature
|
2,114,566 | 908,299 | ||||||
Services exchanged for common stock
|
135,000 | - | ||||||
Stock issued for commitment fee collateral
|
250,000 | - | ||||||
Amortization of prepaid loan costs
|
106,805 | - | ||||||
Loss on disposal od assets
|
- | 2,854 | ||||||
(Increase) decrease in:
|
||||||||
Accounts receivables
|
2,111 | - | ||||||
Inventory
|
1,465,091 | - | ||||||
Other current assets
|
25,249 | (359,456 | ) | |||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
277,197 | 41,782 | ||||||
Accrued expenses
|
138,720 | - | ||||||
Payroll liabilities
|
180,013 | 40,929 | ||||||
Total adjustments
|
5,827,067 | 2,302,208 | ||||||
Net cash used by operating activities
|
(1,955,789 | ) | (3,520,884 | ) | ||||
Investing Activities
|
||||||||
Purchase of furniture and equipment
|
(9,698 | ) | (224,178 | ) | ||||
Development of Patents and trademarks
|
(649,079 | ) | ||||||
Net cash used by investing activities
|
(9,698 | ) | (873,257 | ) | ||||
|
||||||||
Cash Flows from Financing Activities
|
||||||||
Increase in Checks Drawn in Excess of Bank Balance
|
(4,706 | ) | - | |||||
Proceeds from borrowing
|
867,305 | 2,466,893 | ||||||
Deferred stock sales
|
- | 10,000 | ||||||
Repayment of borrowing
|
(5,000 | ) | (30,859 | ) | ||||
Proceeds from issuance of common stock
|
479,593 | 2,416,195 | ||||||
Proceeds from exersice of options and warrants
|
630,100 | - | ||||||
Net cash provided by financing activities
|
1,967,292 | 4,862,229 | ||||||
Net (Decrease) Increase in Cash
|
1,805 | 468,088 | ||||||
Cash at Beginning of Period
|
609 | 312 | ||||||
Cash at End of Period
|
$ | 2,414 | $ | 468,400 | ||||
Supplemental disclosures of cash flow information and
|
- | |||||||
noncash investing and financing activities:
|
||||||||
Debt and accrued interest converted to common stock
|
$ | 889,831 | $ | - | ||||
Satisfaction of accounts payable through issuance of common stock
|
$ | 817,501 | $ | - | ||||
Cancellation of PSPM shares not exchanged for PSRU shares
|
$ | 7 | $ | - | ||||
Detachable warrants issued with convertible debt
|
$ | 352,063 | $ | 987,846 | ||||
Benefical conversion feature of convertible debt
|
$ | 1,899,429 | $ | 1,061,549 | ||||
Property and equipment additions included in accounts payable
|
$ | 8,517 | $ | - | ||||
Inventory additions included in accounts payable
|
$ | 483,684 | $ | - | ||||
Intangible asset additions included in accounts payable
|
$ | 62,677 | $ | 304,515 |
Statements of Changes in Stockholders' Deficit
|
||||||||||||||||||||||||
For the Period From December 31, 2008 through September 30, 2010
|
||||||||||||||||||||||||
Common
Shares |
Common
Amount |
Additional Paid
in Capital |
Prepaid Loan
Costs |
Accumulated
Deficit |
Total
Stockholders' Deficit |
|||||||||||||||||||
Balance - December 31, 2008
|
161,576,019 | $ | 161,576 | $ | 6,509,750 | $ | - | $ | (6,895,273 | ) | $ | (223,947 | ) | |||||||||||
Effect of C-Reorganization on 12/31/08 balance as a result of a change in par value of common stock from $0.001 to $0.0001
|
- | (145,418 | ) | 145,418 | - | |||||||||||||||||||
Stock Issued for Cash
|
13,757,446 | 1,376 | 2,380,556 | 2,381,932 | ||||||||||||||||||||
Stock Issued for Services
|
15,100,000 | 1,510 | 489,490 | 491,000 | ||||||||||||||||||||
Share Based Compensation
|
- | - | 770,342 | 770,342 | ||||||||||||||||||||
Stock Issued upon Exercise of Warrants & Options
|
20,018,190 | 2,002 | 537,492 | 539,494 | ||||||||||||||||||||
Warrants issued with Beneficial Conversion Feature associated with convertible debt
|
- | - | 2,579,408 | 2,579,408 | ||||||||||||||||||||
Stock issued for convertible debentures redeemed
|
2,879,999 | 288 | 431,712 | 432,000 | ||||||||||||||||||||
Stock issued to debt conversion
|
123,436 | 12 | 30,847 | 30,859 | ||||||||||||||||||||
Effect of C-reorganization on common stock, additional paid in capital and stockholders deficit
|
2,000,000 | 200 | - | 200 | ||||||||||||||||||||
Prepaid Loan Costs
|
(213,611 | ) | (213,611 | ) | ||||||||||||||||||||
Less: Amortization
|
106,806 | 106,806 | ||||||||||||||||||||||
Net Loss
|
- | - | - | (7,315,886 | ) | (7,315,886 | ) | |||||||||||||||||
Balance - December 31, 2009
|
215,455,090 | $ | 21,546 | $ | 13,875,015 | $ | (106,805 | ) | $ | (14,211,159 | ) | $ | (421,403 | ) | ||||||||||
Stock Issued for Cash (Unaudited)
|
12,571,312 | 1,257 | 328,336 | - | - | 329,593 | ||||||||||||||||||
Stock Issued for Services (Unaudited)
|
2,616,667 | 262 | 134,738 | - | - | 135,000 | ||||||||||||||||||
Share Based Compensation (Unaudited)
|
- | - | 635,312 | - | - | 635,312 | ||||||||||||||||||
Issuance of warrants and BCF associated with convertible debt (Unaudited)
|
- | - | 2,251,491 | - | - | 2,251,491 | ||||||||||||||||||
Stock issued upon exercise of warrants and options (Unaudited)
|
25,694,662 | 2,570 | 627,530 | - | - | 630,100 | ||||||||||||||||||
Stock issued upon debt conversion (Unaudited)
|
122,648,521 | 12,265 | 1,845,066 | - | - | 1,857,331 | ||||||||||||||||||
Stock issued upon redemption of convertible debentures (Unaudited)
|
233,333 | 23 | 34,977 | - | - | 35,000 | ||||||||||||||||||
Stock issued for commitment fee collateral (Unaudited)
|
10,000,000 | 1,000 | 249,000 | - | - | 250,000 | ||||||||||||||||||
Amortization of Prepaid Loan Costs (Unaudited)
|
- | - | - | 106,805 | - | 106,805 | ||||||||||||||||||
Cancellation of expired stock (Unaudited)
|
(68,743 | ) | (7 | ) | 7 | - | - | - | ||||||||||||||||
Net Loss (Unaudited)
|
- | - | - | - | (7,782,856 | ) | (7,782,856 | ) | ||||||||||||||||
Balance - June 30, 2010 (Unaudited)
|
389,150,842 | $ | 38,916 | $ | 19,981,472 | $ | - | $ | (21,994,015 | ) | $ | (1,973,627 | ) |
Nine months ended
|
||||||||
September 30,
|
||||||||
2010
|
2009
|
|||||||
Actual
|
||||||||
Numerator:
|
||||||||
Net loss attributable to common stockholders
|
$ | (7,782,856 | ) | $ | (5,823,092 | ) | ||
Denominator:
|
||||||||
Weighted average common shares
|
268,520,004 | 172,251,094 | ||||||
Basic net loss per common share
|
$ | (0.03 | ) | $ | (0.03 | ) | ||
Historical outstanding anti-dilutive securities not included in diluted net loss per share calculation
|
||||||||
Convertible debt
|
477,839,833 | 2,525,000 | ||||||
Common stock options
|
44,136,929 | 0 | ||||||
Common stock warrants
|
72,000,000 | 46,887,637 | ||||||
593,976,762 | 49,412,637 |
NOTE 6 – NOTES PAYABLE - RELATED PARTIES
|
||||||||
Notes payable consist of the following:
|
||||||||
September 30, 2010
|
December 31, 2009
|
|||||||
Notes payable, unsecured, to officer at 5% interest, payable upon demand
|
$ | 35,400 | $ | 35,400 | ||||
Note payable, unsecured, to shareholder at 5% interest, payable upon demand
|
26,250 | 26,250 | ||||||
Note payable, unsecured, to officer at 12% interest, payable upon demand, satisfied by common stock issuance
|
- | 18,867 | ||||||
Note payable, unsecured, to officer at 5% interest, payable upon demand
|
- | 205,111 | ||||||
61,650 | 285,628 | |||||||
Less current portion
|
61,650 | 266,761 | ||||||
Long term portion
|
- | 18,867 |
NOTE 7 – CONVERTIBLE DEBT
|
||||||||
Convertible debt consists of the following:
|
||||||||
|
||||||||
September 30, 2010
|
December 31, 2009
|
|||||||
Convertible notes issued to investors, net of discount of $0 and $125,000, as of September 30, 2010 and December 31, 2009, respectively
|
$ | - | $ | 125,000 | ||||
Convertible notes issued to investor, net of discount of $0 and $0, as of September 30, 2010 and December 31, 2009, respectively
|
0 | 213,985 | ||||||
Convertible note issued to an investor, net of discount of $ as of September 30, 2010
|
150,000 | - | ||||||
Convertible debentures issued to investors, net of discount of $754,650 and $1,037,700, as of September 30, 2010 and December 31, 2009, respectively
|
363,350 | 115,300 | ||||||
Convertible notes issued to investor, net of discount of $22,144, as of September 30, 2010
|
27,856 | - | ||||||
Convertible notes issued to investor, net of discount of $45,068, as of September 30, 2010
|
104,933 | - | ||||||
Convertible notes issued to investor, net of discount of $30,818, as of September 30, 2010
|
94,182 | - | ||||||
Convertible notes issued to investor, net of discount of $5,738, as of September 30, 2010
|
69,263 | |||||||
809,584 | 454,285 | |||||||
Less current portion
|
446,234 | 276,485 | ||||||
Long term portion
|
363,350 | 177,800 |
Shares
|
Weighed Average Exercise
Price Per Share
|
Weighed Average Remaining
Contractual Life
|
||||||||||||||||||||||
Stock
|
Stock
|
Stock
|
||||||||||||||||||||||
Warrants
|
Options
|
Warrants
|
Options
|
Warrants
|
Options
|
|||||||||||||||||||
Outstanding at December 31, 2009
|
17,500,000 | 15,980,713 | 0.73 | 0.14 | 3.37 | 2.85 | ||||||||||||||||||
Granted
|
79,000,000 | 43,571,216 | 0.74 | 0.03 | 3.63 | 2.26 | ||||||||||||||||||
Exercised
|
(17,500,000 | ) | (8,625,000 | ) | 0.02 | 0.03 | 2.78 | 2.38 | ||||||||||||||||
Cancelled or Expired
|
(7,000,000 | ) | (6,790,000 | ) | 1.25 | 0.08 | 2.83 | 2.17 | ||||||||||||||||
Outstanding at September 30, 2010
|
72,000,000 | 44,136,929 | 0.75 | 0.06 | 3.90 | 2.90 | ||||||||||||||||||
Exercisable at September 30, 2010
|
72,000,000 | 44,136,929 | 0.75 | 0.06 | 3.58 | 3.61 |
|
·
|
Implement a marketing campaign to drive traffic to and expand exposure to the Company’s website located at www.purespectrum.com
|
|
·
|
Expand the number of internet sites selling our CFL by 12/31/10.
|
|
·
|
Develop the G2 and G3 generations of dimmable compact fluorescent bulbs.
|
|
·
|
Submit design patents.
|
31.1 |
Certification of Chief Executive Officer
|
31.2 |
Certification of Chief Financial Officer
|
32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
By: /s/ Gregory Clements
|
|
Gregory Clements | |
President/CEO and CFO | |
(Principal Executive Officer)
|