Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-191471
PROSPECTUS
SUPPLEMENT NO. 7
923,775
Shares of Common Stock
ENERPULSE
TECHNOLOGIES, INC.
This
Prospectus Supplement No. 7 supplements and amends our Prospectus dated May 19, 2014. This Prospectus Supplement No. 7 includes
our attached Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2015, as filed with the Securities and Exchange
Commission on November 12, 2015.
The
Prospectus, any prospectus supplements filed before the date hereof, and this Prospectus Supplement No. 7 relate to the resale
by (A) Freepoint Commerce Marketing LLC, or Freepoint, of up to (1) 686,275 shares of common stock held by Freepoint (the “Freepoint
Shares”) and (2) 87,500 shares of common stock issuable to Freepoint (the “Freepoint Warrant Shares”) upon exercise
of an outstanding warrant and (B) Roth Capital Partners, LLC, or Roth, of (1) an outstanding warrant issued to Roth by Enerpulse
(the “Underwriter Resale Warrant”) and (2) up to 150,000 shares of common stock issuable to Roth (the “Underwriter
Resale Warrant Shares”) upon exercise of the Underwriter Resale Warrant.
This
Prospectus Supplement No. 7 should be read in conjunction with the Prospectus and any prospectus supplements filed before the
date hereof. Any statement contained in the Prospectus and any prospectus supplements filed before the date hereof shall be deemed
to be modified or superseded to the extent that information in this Prospectus Supplement No. 7 modifies or supersedes such statement.
Any statement that is modified or superseded shall not be deemed to constitute a part of the Prospectus except as modified or
superseded by this Prospectus Supplement No. 7.
Our
common stock is quoted on the OTCQB under the symbol “ENPT.” On November 13, 2015, the closing price for our common
stock was $0.10. The price of our common stock may fluctuate based on the demand for our common stock.
INVESTING
IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE 12 OF THE PROSPECTUS.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THE PROSPECTUS OR THIS PROSPECTUS SUPPLEMENT NO. 7 IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The
date of this Prospectus Supplement No. 7 is November 17, 2015.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
[X] |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended September 30, 2015
or
[ ] |
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: 000-54092
ENERPULSE
TECHNOLOGIES, INC.
(Exact
name of registrant as specified in its charter)
Nevada |
27-2969241 |
(State
or Other Jurisdiction of
Incorporation
or Organization) |
(I.R.S.
Employer
Identification
No.) |
|
|
2451
Alamo Ave SE
Albuquerque,
New Mexico |
87106 |
(Address
of Principal Executive Offices) |
(Zip
Code) |
(505)
842-5201
(Registrant’s
Telephone Number, Including Area Code)
Securities
registered pursuant to Section 12(b) of the Act
None
Securities
registered pursuant to Section 12(g) of the Act
Common
Stock, par value $0.001 per share
(Title
of Class)
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 [X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted 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 and post such files). Yes [X] 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 definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer |
[ ] |
Accelerated
filer |
[ ] |
Non-accelerated
filer |
[ ] |
Smaller
reporting company |
[X] |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes [ ]
No [X]
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Total
shares of common stock as of the close of business on November 11, 2015: 15,512,381.
ENERPULSE
TECHNOLOGIES, INC.
FORM
10-Q
FOR
THE QUARTER ENDED SEPTEMBER 30, 2015
INDEX
PART
I. FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
ENERPULSE
TECHNOLOGIES, INC.
CONSOLIDATED
BALANCE SHEETS
| |
September
30, 2015 | | |
December
31, 2014 | |
| |
(Unaudited) | | |
| |
| |
| | |
| |
ASSETS | |
| | | |
| | |
Current
Assets | |
| | | |
| | |
Cash
and cash equivalents | |
$ | 849,400 | | |
$ | 17,077 | |
Accounts
receivable, net | |
| 90,117 | | |
| 73,572 | |
Inventory | |
| 288,009 | | |
| 337,297 | |
Other
current assets | |
| 19,520 | | |
| 22,981 | |
Total
current assets | |
| 1,247,046 | | |
| 450,927 | |
Intangible
assets, net of accumulated amortization of $153,430 (2015) and $128,444 (2014) | |
| 487,565 | | |
| 483,982 | |
Property
and equipment, net | |
| 150,879 | | |
| 173,963 | |
Other
assets | |
| 9,314 | | |
| 118,557 | |
Total
assets | |
$ | 1,894,804 | | |
$ | 1,227,429 | |
| |
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
Current
Liabilities | |
| | | |
| | |
Accounts
payable | |
$ | 313,784 | | |
$ | 554,747 | |
Accrued
expenses | |
| 231,681 | | |
| 135,968 | |
Current
portion of notes payable | |
| 216,271 | | |
| - | |
Current
portion of capital lease obligations | |
| 24,737 | | |
| 24,737 | |
Total
current liabilities | |
| 786,473 | | |
| 715,452 | |
Long-Term
Liabilities | |
| | | |
| | |
Capital
lease obligations, net of current portion | |
| 2,609 | | |
| 20,778 | |
Notes
payable, net of offering costs, discounts and current portion | |
| 1,407,006 | | |
| 248,225 | |
Warrants
liability | |
| 949,016 | | |
| 817,250 | |
| |
| 2,358,631 | | |
| 1,086,253 | |
Total
liabilities | |
| 3,145,104 | | |
| 1,801,705 | |
| |
| | | |
| | |
Commitments
and Contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders’
Deficit | |
| | | |
| | |
Preferred
stock, 10,000,000 shares authorized; no shares issued and outstanding; $0.001 par value | |
| - | | |
| - | |
Common
stock, 100,000,000 shares authorized; 15,022,381 and 13,732,381 shares issued and outstanding at September 30, 2015 and December
31, 2014, respectively; $0.001 par value | |
| 15,023 | | |
| 13,733 | |
Additional
paid-in capital | |
| 27,882,597 | | |
| 26,812,046 | |
Note
receivable, related party | |
| (205,635 | ) | |
| (204,100 | ) |
Accumulated
deficit | |
| (28,942,285 | ) | |
| (27,195,955 | ) |
Total
stockholders’ deficit | |
| (1,250,300 | ) | |
| (574,276 | ) |
Total
liabilities and stockholders’ deficit | |
$ | 1,894,804 | | |
$ | 1,227,429 | |
See
notes to accompanying unaudited consolidated financial statements.
ENERPULSE
TECHNOLOGIES, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
| |
Three
Months Ended | | |
Nine
Months Ended | |
| |
September
30, | | |
September
30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Sales | |
$ | 102,283 | | |
$ | 64,355 | | |
$ | 316,732 | | |
$ | 254,884 | |
Cost
of sales | |
| 58,918 | | |
| 63,818 | | |
| 178,016 | | |
| 237,812 | |
Gross
profit | |
| 43,365 | | |
| 537 | | |
| 138,716 | | |
| 17,072 | |
Selling,
general and administrative expenses | |
| 739,936 | | |
| 841,372 | | |
| 2,214,181 | | |
| 2,608,779 | |
Loss
from operations | |
| (696,571 | ) | |
| (840,835 | ) | |
| (2,075,465 | ) | |
| (2,591,707 | ) |
Other
income (expense), net | |
| | | |
| | | |
| | | |
| | |
Fair
value adjustments of derivative liabilities | |
| 446,312 | | |
| 23,497 | | |
| 765,790 | | |
| (299,236 | ) |
Interest | |
| (47,845 | ) | |
| (1,702 | ) | |
| (117,933 | ) | |
| (12,996 | ) |
Amortization
of debt discount | |
| (170,531 | ) | |
| - | | |
| (402,858 | ) | |
| - | |
Other
income (expense) | |
| 37,074 | | |
| 508 | | |
| 84,136 | | |
| (81,774 | ) |
Other
income (expense), net | |
| 265,010 | | |
| 22,303 | | |
| 329,135 | | |
| (394,006 | ) |
Net
loss | |
$ | (431,561 | ) | |
$ | (818,532 | ) | |
$ | (1,746,330 | ) | |
$ | (2,985,713 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net
loss per common share (basic and diluted) | |
$ | (0.03 | ) | |
$ | (0.06 | ) | |
$ | (0.12 | ) | |
$ | (0.27 | ) |
Net
loss per puttable common share (basic and diluted) | |
$ | - | | |
$ | (0.06 | ) | |
$ | - | | |
$ | (0.27 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted
average number of shares outstanding (basic and diluted) - common | |
| 15,022,381 | | |
| 13,732,381 | | |
| 14,638,608 | | |
| 11,149,963 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted
average number of shares outstanding (basic and diluted) - puttable common | |
| - | | |
| 79,914 | | |
| - | | |
| 113,974 | |
See
notes to accompanying unaudited consolidated financial statements.
ENERPULSE
TECHNOLOGIES, INC.
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
(Unaudited)
| |
Common
stock | | |
Additional | | |
Note
receivable, | | |
Accumulated | | |
| |
| |
Shares | | |
Amount | | |
paid-in
capital | | |
related
party | | |
deficit | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Balances,
December 31, 2014 | |
| 13,732,381 | | |
$ | 13,733 | | |
$ | 26,812,046 | | |
$ | (204,100 | ) | |
$ | (27,195,955 | ) | |
$ | (574,276 | ) |
Issuance
of common stock, net of offering costs | |
| 800,000 | | |
| 800 | | |
| 159,200 | | |
| - | | |
| - | | |
| 160,000 | |
Beneficial
conversion feature with issuance of senior secured convertible notes | |
| - | | |
| - | | |
| 752,140 | | |
| - | | |
| - | | |
| 752,140 | |
Issuance
of common stock, consultant | |
| 490,000 | | |
| 490 | | |
| 97,510 | | |
| - | | |
| - | | |
| 98,000 | |
Accrued
interest receivable | |
| - | | |
| - | | |
| - | | |
| (1,535 | ) | |
| - | | |
| (1,535 | ) |
Stock-based
compensation expense | |
| - | | |
| - | | |
| 61,701 | | |
| - | | |
| - | | |
| 61,701 | |
Net
loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,746,330 | ) | |
| (1,746,330 | ) |
Balances,
September 30, 2015 | |
| 15,022,381 | | |
$ | 15,023 | | |
$ | 27,882,597 | | |
$ | (205,635 | ) | |
$ | (28,942,285 | ) | |
$ | (1,250,300 | ) |
See
notes to accompanying unaudited consolidated financial statements.
ENERPULSE
TECHNOLOGIES, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
| |
Nine
Months Ended | |
| |
September
30, | |
| |
2015
| | |
2014 | |
| |
| | |
| |
Cash
Flows From Operating Activities | |
| | | |
| | |
Net
loss | |
$ | (1,746,330 | ) | |
$ | (2,985,713 | ) |
Adjustments
to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Stock-based
compensation | |
| 159,701 | | |
| 411,544 | |
Amortization | |
| 24,986 | | |
| 23,158 | |
Depreciation | |
| 41,304 | | |
| 40,023 | |
Amortization
of repricing of warrants on notes payable | |
| - | | |
| 52,005 | |
Amortization
of debt discounts | |
| 404,358 | | |
| 788 | |
Loss
on modification of derivative liabilities | |
| - | | |
| 31,356 | |
Fair
value adjustments of derivative instruments | |
| (765,790 | ) | |
| 299,236 | |
Interest
on note receivable, related party | |
| (1,535 | ) | |
| (1,519 | ) |
Provision
for doubtful accounts | |
| 8,971 | | |
| 2,952 | |
Provision
for obsolete inventory | |
| 19,197 | | |
| - | |
Loss
on disposal of equipment | |
| 8,000 | | |
| - | |
Changes
in operating assets and liabilities: | |
| | | |
| | |
Accounts
receivable | |
| (25,516 | ) | |
| 23,779 | |
Inventory | |
| 30,091 | | |
| (57,561 | ) |
Accounts
payable | |
| (132,220 | ) | |
| (161,629 | ) |
Accrued
expenses | |
| 95,713 | | |
| (66,382 | ) |
Other | |
| 3,960 | | |
| (8,915 | ) |
Net
cash used in operating activities | |
| (1,875,110 | ) | |
| (2,396,878 | ) |
| |
| | | |
| | |
Cash
Flows From Investing Activities | |
| | | |
| | |
Purchase
of property and equipment | |
| (26,219 | ) | |
| (37,134 | ) |
Purchase
of intangible assets | |
| (28,569 | ) | |
| (105,453 | ) |
Net
cash used in investing activities | |
| (54,788 | ) | |
| (142,587 | ) |
| |
| | | |
| | |
Cash
Flows From Financing Activities | |
| | | |
| | |
Proceeds
from issuance of common stock and related warrants, net of offering costs | |
| - | | |
| 3,116,966 | |
Redemption
of puttable common stock | |
| - | | |
| (200,000 | ) |
Proceeds
from notes payable, net of offering costs | |
| 2,830,390 | | |
| 230,000 | |
Payments
on capital lease and notes payable | |
| (68,169 | ) | |
| (237,775 | ) |
Net
cash provided by financing activities | |
| 2,762,221 | | |
| 2,909,191 | |
Net
increase in cash and cash equivalents | |
| 832,323 | | |
| 369,726 | |
Cash
and cash equivalents at beginning of year | |
| 17,077 | | |
| 281,607 | |
Cash
and cash equivalents at end of year | |
$ | 849,400 | | |
$ | 651,333 | |
| |
| | | |
| | |
Supplement
cash flow information: | |
| | | |
| | |
Cash
paid for interest | |
$ | 3,709 | | |
$ | 12,208 | |
| |
| | | |
| | |
Noncash
investing and financing activities: | |
| | | |
| | |
Warrants
issued related to offering costs | |
$ | 137,655 | | |
$ | 119,570 | |
Common
stock issued related to debt offering costs | |
$ | 160,000 | | |
$ | - | |
Common
stock issued related to consulting agreement | |
$ | 98,000 | | |
$ | - | |
Deferred
offering costs capitalized in 2013 | |
$ | - | | |
$ | 65,771 | |
Adjustment
reulting from change in value of puttable common stock | |
$ | - | | |
$ | 93,780 | |
Note
payable issued in conjunction with redemption of puttable common stock | |
$ | - | | |
$ | 100,000 | |
Equipment
acquired under capital lease | |
$ | - | | |
$ | 21,595 | |
See
notes to accompanying unaudited consolidated financial statements.
Note
1 -
Organization, Basis of Presentation and Management’s Plans
Organization
Enerpulse
Technologies, Inc. was incorporated in the state of Nevada on May 3, 2010 and conducts its operations primarily through its wholly-owned
subsidiary, Enerpulse, Inc. (collectively the “Company”, or “Enerpulse”). Enerpulse was incorporated in
the state of Delaware on January 20, 2004. The Company engages in the design, development, manufacturing and marketing of an energy
and efficiency enhancing product in the automotive industry. Company headquarters are located in Albuquerque, New Mexico.
Basis
of Presentation
The
interim consolidated financial statements have been prepared by management without audit. Pursuant to the rules and regulations
of the United States Securities and Exchange Commission (the “SEC”), certain information and footnote disclosures
normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP)
have been condensed or omitted pursuant to such rules and regulations. These interim consolidated financial statements should
be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2014,
included in the Company’s Annual Report on Form 10-K filed with the SEC. All intercompany balances and transactions have
been eliminated in consolidation.
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual
results could differ from these estimates.
In
the opinion of the management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the
financial position as of the interim date, and the results of operations, changes in stockholders’ equity (deficit), and
cash flows, for the interim periods presented, have been made. The interim results are not necessarily indicative of the operating
results for the full year or future periods. Certain prior year amounts have been reclassified to conform to the current
year presentation.
Management’s
Plans
The
accompanying interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a loss from
operations of approximately $2,075,000 for the nine months ended September 30, 2015 and the Company anticipates a loss from operations
for the remainder of 2015. The Company also used net cash in operations of approximately $1,875,000 for the nine months ended
September 30, 2015 and has working capital of approximately $461,000 at September 30, 2015. As a result of the Company’s
history of losses from operations, cash flows used in operations and limited liquidity, the Company’s independent registered
public accounting firm’s report on the Company’s consolidated financial statements as of and for the year ended December
31, 2014 includes an explanatory paragraph stating that these conditions raise substantial doubt about the Company’s ability
to continue as a going concern. The interim consolidated financial statements do not include any adjustments relating to the recoverability
and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable
to continue as a going concern. Management’s plans are to secure additional funding to cover working capital needs until
positive cash flow from operations occurs, which is anticipated to commence in 2016. The Company has a history of securing funding
from various venture capital firms (approximately $22 million) since 2004. In addition, the Company filed with the SEC, a Registration
Statement on Form S-1 (the “Offering”), which was declared effective by the SEC on May 13, 2014 for the public offering
of 5,000,000 shares of common stock and 5,000,000 warrants to purchase up to an aggregate of 7,500,000 shares of common stock.
On May 16, 2014, the Company announced the pricing of the Offering, and on May 21, 2014, the Company closed the Offering for 5,000,000
shares of its common stock and 5,000,000 warrants at an offering price of $0.75 per share and $0.05 per warrant, resulting in
gross proceeds of $4.0 million. During March 2014, the Company also received $230,000 in financing in exchange for promissory
notes with warrants, which funded the Company prior to the closing of the Offering. In addition, on February 20, 2015, the Company
closed on approximately $3,049,000 in thirty-six month convertible notes at a 6% interest rate and 50% warrant coverage. Warrants
were issued for 7,621,875 common shares at an exercise price of $0.20 per share. The notes are convertible into 15,243,750 shares
of the Company’s common stock.
Note
2 - Summary of Significant Accounting Policies
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable represent the amount billed to, but uncollected from customers. Accounts receivable are carried at original invoice
amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management
determines the allowance for doubtful accounts by identifying past due accounts. Accounts receivable are written off when deemed
uncollectible. A receivable is considered to be past due if any portion of the receivable balance is outstanding for more than
90 days past each respective customer’s terms. The allowance for doubtful accounts was approximately $9,000 and $6,900,
as of September 30, 2015 and December 31, 2014, respectively. No interest is charged on late accounts. No material amounts were
written off during the three and nine months ended September 30, 2015 and 2014.
Revenue
Recognition
The
Company recognizes revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists; (2) delivery
has occurred; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. This generally occurs
upon shipment to the customer. Substantially all of the Company’s revenue is generated from direct sales of its product
to the automotive and powersports aftermarkets.
Fair
Value Measurements
The
carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short
maturities. The carrying value of debt approximates fair value, as the interest rates on the outstanding borrowings are at rates
that approximate market rates for borrowings with similar terms and maturities. The fair value amounts of receivables from and
notes payable to related parties are not practicable to estimate based on the related party nature of the underlying transactions.
Fair
Value of Financial Instruments
The
Company accounts for financial instruments utilizing a framework for measuring fair value in generally accepted accounting principles.
To increase consistency and comparability in fair value measurements, a fair value hierarchy is used that prioritizes the inputs
to valuation techniques used to measure fair value into three levels as follows:
|
Level
1 - |
quoted
prices (unadjusted) in active markets for identical assets or liabilities; |
|
|
|
|
Level
2 - |
observable
inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical
or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or
whose significant value drivers are observable; and |
|
|
|
|
Level
3 - |
assets
and liabilities whose significant value drivers are unobservable. |
Observable
inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s
market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used
to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value
measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such
determination requires significant management judgment. As of September 30, 2015 and December 31, 2014, cash and cash equivalents
measured at fair value were classified as Level 1 and the warrants liability measured at fair value was classified as Level 2
and Level 3, as appropriate (see Note 7).
Offering
Costs
Offering
costs consist principally of legal, accounting and underwriters’ fees incurred that are directly attributable to equity
and debt offerings. Offering costs related to the equity offering were charged against the gross proceeds received upon the completion
of the Offering. Offering costs attributable to debt offerings are amortized over the term of the related debt. At December 31,
2014, deferred offering costs of approximately $104,000 were included in other non-current assets.
Research
and Development
Research
and development costs are charged to operations when incurred and are included in selling and administrative expenses. The amounts
charged for the three months ended September 30, 2015 and 2014 were approximately $129,000 and $96,000, respectively. The amounts
charged for the nine months ended September 30, 2015 and 2014 were approximately $313,000 and $268,000, respectively.
Net
Income (Loss) Per Share
Net
income (loss) per share is calculated using the two-class method per U.S. GAAP. Under the two-class method, the Company treats
only the portion of the periodic adjustment to the puttable common stock’s carrying amount that reflects redemption in excess
of fair value like a dividend. Basic and diluted net income (loss) per share has been computed using the weighted-average number
of shares of common stock outstanding during the periods as follows:
| |
For
the three months ended September 30, | |
| |
2015 | | |
2014 | |
| |
Common | | |
Common | | |
Puttable | |
Weighted
average shares of stock used in basic and diluted loss per share | |
| 15,022,381 | | |
| 13,732,381 | | |
| 79,914 | |
| |
| | | |
| | | |
| | |
Allocation
of net loss | |
$ | (431,561 | ) | |
$ | (813,796 | ) | |
$ | (4,736 | ) |
| |
| | | |
| | | |
| | |
Basic
and diluted net loss per share | |
$ | (0.03 | ) | |
$ | (0.06 | ) | |
$ | (0.06 | ) |
| |
For
the nine months ended September 30, | |
| |
2015 | | |
2014 | |
| |
Common | | |
Common | | |
Puttable | |
Weighted
average shares of stock used in basic and diluted loss per share | |
| 14,638,608 | | |
| 11,149,963 | | |
| 113,974 | |
| |
| | | |
| | | |
| | |
Allocation
of net loss | |
$ | (1,746,330 | ) | |
$ | (2,955,502 | ) | |
$ | (30,211 | ) |
| |
| | | |
| | | |
| | |
Basic
and diluted net loss per share | |
$ | (0.12 | ) | |
$ | (0.27 | ) | |
$ | (0.27 | ) |
The
weighted average number of shares used to compute diluted net loss per share excludes any potentially dilutive securities and
assumed exercise of stock options and warrants as they were either out-of-the money or the effect would be antidilutive. Common
stock equivalents of approximately 35.1 million and 11.1 million as of September 30, 2015 and 2014, respectively, were excluded
from the calculation because of their antidilutive effect.
Stock-Based
Compensation
The
Company accounts for stock options to employees and nonemployee board members based on the estimated fair value at the option
grant date. The Company measures the cost of employee services received in exchange for stock options based on the grant date
fair value of the award and recognizes the cost over the period the employee is required to provide services for the award.
The
Company generally utilizes the Black-Scholes option-pricing model to determine fair value of stock option awards. Key assumptions
include applicable volatility rates, risk-free interest rates and the instrument’s expected remaining life. As allowed by
U.S. GAAP, for companies with a short period of publicly traded stock history, the Company’s estimate of expected volatility
and expected term are primarily based on the average volatilities and expected terms of identified companies with similar attributes
to the Company, including industry, stage of life cycle, size and financial leverage. The risk-free rate for periods within the
contractual life of the warrant is based on the U.S. Treasury yield curve in effect at the time of grant valuation. These assumptions
require significant management judgment.
Recent
Accounting Pronouncements
In
April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-03, “Simplifying
the Presentation of Debt Issuance Costs.” ASU 2015-03 requires that debt issuance costs be presented in the balance sheet
as a direct deduction of the carrying value of the associated debt liability. Under the existing guidance, debt issuance costs
are required to be presented in the balance sheet as a deferred charge (i.e., an asset). The new standard is effective for periods
beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued.
The new standard should be applied retrospectively to all periods presented in the financial statements. The Company early adopted
the standard during the three months ended March 31, 2015 and thus debt financing costs are presented as a deduction of the carrying
value of its convertible note payable instead of presenting such costs as an asset in the consolidated balance sheets.
In
January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items.” ASU 2015-01,
removes the concept of extraordinary items from U.S. GAAP. Under the existing guidance, an entity is required to separately disclose
extraordinary items, net of tax, in the income statement after income from continuing operations if an event or transaction is
unusual and occurs infrequently. This separate, net-of-tax presentation will no longer be allowed. The existing requirement to
separately disclose events or transactions that are unusual or occur infrequently on a pre-tax basis within continuing operations
in the income statement has been retained. The new guidance requires similar separate presentation of items that are both unusual
and infrequent. The new standard is effective for periods beginning after December 15, 2015. Early adoption is permitted, but
only as of the beginning of the fiscal year of adoption. Upon adoption, the Company will present transactions that are both unusual
and infrequent, if any, on a pre-tax basis within continuing operations in the consolidated statement of operations.
In
August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern - Disclosures of Uncertainties
about an Entity’s Ability to Continue as a Going Concern.” ASU 2014-15 provides new guidance related to management’s
responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern by
incorporating and expanding upon certain principles that are currently in U.S. auditing standards and to provide related footnote
disclosures. This new guidance is effective for annual reporting periods ending after December 15, 2016, and for interim periods
thereafter. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting guidance
may have on its consolidated financial statements and footnote disclosures.
In
June 2014, the FASB, issued ASU No. 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share- Based
Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period.”
ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period,
be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair
value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes
probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s)
for which the requisite service has already been rendered. The updated guidance is effective for annual reporting periods beginning
after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted. The Company does
not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements.
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts from
Customers, which supersedes the revenue recognition in Revenue Recognition (Topic 605), and requires entities to recognize
revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB delayed the effective
date by one year. This new standard is now effective for fiscal years, and interim periods within those years, beginning after
December 15, 2017, and is to be applied retrospectively, with early adoption now permitted to the effective date of December 15,
2016. The Company is currently evaluating this new standard and the potential impact this standard may have upon adoption.
Note
3 - Inventory
Inventory
is stated at the lower of average cost or market and consists of various ignition components, high voltage cables, spark plugs,
and high voltage capacitors. The inventory cost method is first-in, first-out. Indirect overhead and indirect labor are allocated
on a per unit basis during the work in progress and finished goods stage of production. The Company monitors inventory for turnover
and obsolescence and reduces the carrying value of total inventory for excess and obsolete inventory as deemed necessary.
Inventory
consisted of the following:
| |
September
30, 2015 | | |
December
31, 2014 | |
| |
| | |
| |
Raw
materials | |
$ | 187,153 | | |
$ | 219,449 | |
Work
in process | |
| 35,171 | | |
| 38,962 | |
Finished
goods | |
| 65,685 | | |
| 78,886 | |
| |
| | | |
| | |
Total
inventory | |
$ | 288,009 | | |
$ | 337,297 | |
Note
4 - Property and Equipment, Net
Property
and equipment, net, consisted of the following:
| |
September
30, 2015 | | |
December
31, 2014 | |
| |
| | |
| |
Vehicles | |
$ | 22,679 | | |
$ | 22,679 | |
Software
and equipment | |
| 817,996 | | |
| 802,849 | |
Furniture
and fixtures | |
| 26,143 | | |
| 23,071 | |
Leasehold
improvements | |
| 254,137 | | |
| 254,137 | |
| |
| 1,120,955 | | |
| 1,102,736 | |
Less
accumulated depreciation | |
| (970,076 | ) | |
| (928,773 | ) |
| |
| | | |
| | |
Total
property and equipment, net | |
$ | 150,879 | | |
$ | 173,963 | |
Note
5 - Notes Payable
Notes
payable consist of the following:
| |
September
30, 2015 | | |
December
31, 2014 | |
| |
| | |
| |
LWM,
LLC, with an annual interest rate equal to the Federal Funds Rate (as announced by the Federal Reserve Bank of New York) for
the first day of the calendar year, 1.0% at September 30, 2015 and December 31, 2014; unsecured; due with interest on September
5, 2016 | |
$ | 166,271 | | |
$ | 166,271 | |
| |
| | | |
| | |
Senior
secured convertible notes; payable with interest at 6.0% per annum; secured by all of the Company’s assets; due with
interest on February 20, 2018 | |
| 3,048,750 | | |
| - | |
| |
| | | |
| | |
Promissory
note; payable without interest (interest imputed at 12.0% per annum); unsecured; due on August 25, 2016 | |
| 50,000 | | |
| 100,000 | |
| |
| 3,265,021 | | |
| 266,271 | |
Discount | |
| (1,224,049 | ) | |
| (18,046 | ) |
Offering
Costs | |
| (417,695 | ) | |
| - | |
Current
Portion | |
| (216,271 | ) | |
| - | |
| |
| | | |
| | |
Long-term
portion | |
$ | 1,407,006 | | |
$ | 248,225 | |
On
February 20, 2015, the Company issued approximately $3,049,000 in senior secured convertible notes with 50% warrant coverage (see
Note 7). The notes convert into 15,243,750 shares of the Company’s common stock (see Note 6), are secured by all of the
Company’s assets, and are due with interest on February 20, 2018. The convertible notes bear interest at the rate of 6%
per annum compounded annually, are payable at maturity, and the principal and interest outstanding under the convertible notes
are convertible into shares of our common stock at any time after issuance, at the option of the purchaser, at a conversion price
equal to $0.20 per share, subject to adjustment upon the occurrence of certain events, including stock dividends, stock splits
and the issuance of common stock equivalents at a price below the conversion price. Subject to the Company fulfilling certain
conditions, including beneficial ownership limits, the convertible notes are subject to a mandatory conversion if the closing
price of our common stock for any 30 consecutive days commencing after the issue date of the convertible notes equals or exceeds
$0.60 per share. Unless waived in writing by the purchaser, no conversion of the convertible notes can be effected to the extent
that as a result of such conversion the purchaser would beneficially own more than 9.99% in the aggregate of our issued and outstanding
common stock immediately after giving effect to the issuance of common stock upon conversion. For so long as the Company has any
obligation under the convertible notes, the Company has agreed to certain restrictions regarding, among other things, incurrence
of additional debt, liens, amendments to charter documents, repurchase of stock, payment of cash dividends, affiliated transactions.
The Company is also prohibited from entering into certain variable priced agreements until the convertible notes are repaid in
full.
The
Company determined that the embedded conversion feature did not meet the criteria for bifurcation because of the limited trading
volume of the Company’s common stock relative to the number of shares to be converted. As a result, the shares to be issued
upon conversion are not readily convertible to cash. The Company determined that the discount upon conversion required recognition
of a beneficial conversion feature. Accordingly, the Company recognized a beneficial conversion feature and debt discount of approximately
$752,000 on the issuance date, February 20, 2015. The debt discount is being accreted to interest expense over the life of the
convertible notes using the effective interest method. The Company utilized a binomial option pricing model (“BOPM”)
to develop its assumptions for determining the fair value of the beneficial conversion feature. The beneficial conversion feature
was measured at the effective conversion price of the debt, after considering the relative fair value assigned to the warrants
with the debt.
In
conjunction with the February 20, 2015 debt offering, the Company paid its placement agent, and/or its designees a commission
equal to $210,000 consisting of (i) $50,000 in cash, (ii) 800,000 shares of the Company’s common stock and (iii) warrants
exercisable for up to 1,050,000 common shares at an exercise price of $0.20 per share.
Total
debt offering costs of approximately $509,000 included placement agent commissions, underwriter’s commissions, legal fees,
consulting services, and audit and accounting services, and filing service fees, and were netted against the gross proceeds received.
On
August 25, 2014, the Company entered into a promissory note with the shareholders of the Company’s puttable common stock.
As a result of the debt offering on February 20, 2015, the Company repaid $50,000 on the promissory note and agreed to pay the
remaining $50,000 by the due date, August 25, 2016.
During
March 2014, under the terms of a note purchase agreement, the Company received $130,000 in financing from two employees and an
affiliate of a stockholder in exchange for three bridge loans. The lenders also received warrants to purchase 17,334 shares of
common stock at an initial exercise price of $3.75 per share. The note purchase agreement allowed the Company to borrow up to
$400,000 through the issuance of promissory notes. The bridge loans matured on May 19, 2014. Two of the loans accrued interest
at an annual rate equal to 12%, due upon repayment. The third loan accrued $6,000 of interest, due upon repayment. The loans and
associated interest were repaid by May 29, 2014 with proceeds from the Offering.
On
March 27, 2014, Freepoint Commerce Marketing LLC (“Freepoint”) extended $100,000 in financing in exchange for a note
and received a warrant to purchase 16,667 shares of common stock at an initial exercise price of $3.00 per share. The note accrued
interest at an annual rate equal to 12% per annum, due upon repayment. The financing and associated interest were repaid by May
29, 2014 with proceeds from the Offering.
The
Company estimated the relative fair value of the warrants issued with the March 2014 notes to be $37,127 (see Note 7), which was
recognized as additional interest expense over the term of the outstanding related notes.
Note
6 - Capital Stock
As
disclosed in Note 5, the Company issued approximately $3,049,000 in 6% senior secured convertible notes with warrants. The notes
convert into 15,243,750 shares of the Company’s common stock and the warrants are exercisable for up to 7,621,875 common
shares at an exercise price of $0.20 per share. In addition, the Company paid its placement agent and/or its designees a commission,
which included (i) 800,000 shares of the Company’s common stock and (ii) warrants exercisable for up to 1,050,000 common
shares at an exercise price of $0.20 per share. The Company estimated the fair value of the common stock issued to be $160,000
(see Note 7), which is recognized as debt offering costs. The fair value of the warrants was determined to be approximately $138,000.
On
April 3, 2015, the Company issued 490,000 shares of common stock to a third party market advisory service. The Company estimated
the fair value of the common stock issued to be $98,000 (see Note 8).
Note
7 - Warrants
As
disclosed in Note 5, on February 20, 2015, the Company issued approximately $3,049,000 in 6% senior secured convertible notes
with warrants for 7,621,875 common shares at an exercise price of $0.20 per share and the Company paid its placement agent and/or
its designees a commission, which included warrants exercisable for up to 1,050,000 common shares at an exercise price of $0.20
per share. The Company estimated the fair value of the warrants issued with the convertible notes to be approximately $890,000,
which is recognized as additional interest expense over the term of the outstanding related notes.
The
February 20, 2015 warrant agreements contain anti-dilutive provisions that adjust the exercise price if the Company issues any
common stock, securities convertible into common stock, or other securities (subject to certain exceptions) at a value below the
exercise price of the warrants. The warrants may also be exercised on a cashless basis if the fair market value of one share of
common stock on the calculation date is greater than the exercise price of the warrant. Accordingly, the warrants have been classified
as a derivative liability.
On
January 15, 2015, the Company issued 75,000 warrants to a consultant to purchase common stock at an initial exercise price of
$0.75 per share. The warrants vested immediately. The warrants expire in 5 years from the date of their issuance. The warrants
may also be exercised on a cashless basis if the fair market value of one share of common stock on the calculation date is greater
than the exercise price of the warrant, and include net cash settlement for fractional shares. As a result, the warrants are deemed
to be subject to potential net cash settlement and must be classified as derivative liabilities.
The
January/February 2015 warrants combined with prior year’s non-equity offering warrants are collectively referred to as the
“Non-Equity Offering Warrants.”
The
May 2014 Publicly Registered Warrants agreement contain anti-dilutive provisions that adjust the exercise price if the Company
issues any common stock, securities convertible into common stock, or other securities (subject to certain exceptions) at a value
below the then-existing exercise price of the May 2014 Publicly Registered Warrants. As a result of the February 20, 2015, 6%
senior secured convertible notes transaction, the exercise price of the May 2014 Publicly Registered Warrants was reset to $0.20
per share.
Accounting
Standards Codification (“ASC”) 815 - Derivatives and Hedging provides guidance to determine what types of instruments,
or embedded features in an instrument, are considered derivatives. This guidance can affect the accounting for convertible instruments
that contain provisions to protect holders from a decline in the stock price, referred to as anti-dilution or down-round protection.
Down-round provisions reduce the exercise price of a convertible instrument if a company either issues equity shares for a price
that is lower than the exercise price of those instruments, or issues new convertible instruments that have a lower exercise price.
The Company has determined that the Non-Equity Offering, Resale, Compensation (related to the Offering), and Publicly Registered
Warrants, with their related down-round and/or net cash settlement provisions, should be treated as a derivative and thus classified
as warrants liability in the accompanying September 30, 2015 (unaudited) and December 31, 2014 consolidated balance sheets. The
Company is required to report derivatives at fair value and record the fluctuations in fair value in current operations.
The
Company recognizes the warrants liability at their respective fair values at inception and on each reporting date. The Company
utilized a BOPM to develop its assumptions for determining the fair value of the warrants. Changes in the fair value of the derivative
instrument liabilities and key assumptions at the issue date and each reporting date are as follows:
| |
Non-Equity | | |
| | |
| | |
| | |
| |
| |
Offering | | |
Resale | | |
Compensation | | |
Publicly
Registered | | |
| |
| |
Warrants | | |
Warrants | | |
Warrants | | |
Warrants | | |
Total | |
Balance
at December 31, 2014 | |
$ | 27,750 | | |
$ | 19,800 | | |
$ | 19,700 | | |
$ | 750,000 | | |
$ | 817,250 | |
Orgination
of derivative instrument | |
| 897,556 | | |
| - | | |
| - | | |
| - | | |
| 897,556 | |
Adjustment
resulting from change in value of underlying | |
| (378,860 | ) | |
| (19,290 | ) | |
| (17,640 | ) | |
| (350,000 | ) | |
| (765,790 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance
at September 30, 2015 | |
$ | 546,446 | | |
$ | 510 | | |
$ | 2,060 | | |
$ | 400,000 | | |
$ | 949,016 | |
| |
Non-Equity | | |
| | |
| |
| |
Offering | | |
Resale | | |
Compensation | |
| |
Warrants | | |
Warrants | | |
Warrants | |
September
30, 2015: | |
| | | |
| | | |
| | |
Annual
volatility | |
| 82%
- 85 | % | |
| 83 | % | |
| 85 | % |
Risk-free
rate | |
| 0.64%
- 1.37 | % | |
| 0.92 | % | |
| 0.92 | % |
Dividend
rate | |
| - | % | |
| - | % | |
| - | % |
Contractual
term | |
| 1.59
- 4.39 | | |
| 2.93 | | |
| 3.63 | |
Closing
price of common stock | |
$ | 0.12 | | |
$ | 0.12 | | |
$ | 0.12 | |
Conversion/exercise
price | |
$ | 0.20
- 1.00 | | |
$ | 2.66 | | |
$ | 1.00 | |
Origination: | |
| | | |
| | | |
| | |
Annual
volatility | |
| 82 | % | |
| | | |
| | |
Risk-free
rate | |
| 1.22%
- 1.61% | | |
| | | |
| | |
Dividend
rate | |
| - | % | |
| | | |
| | |
Contractual
term | |
| 4.75
- 5.00 | | |
| | | |
| | |
Closing
price of common stock | |
$ | 0.200
- 0.235 | | |
| | | |
| | |
Conversion/exercise
price | |
$ | 0.20
- 0.75 | | |
| | | |
| | |
The
warrants liability associated with the Non-Equity Offering, Resale and Compensation warrants is considered a Level 3 liability
on the fair value hierarchy as the determination of fair values includes various assumptions about future activities, stock price,
and historical volatility inputs. The warrants liability associated with the Publicly Registered Warrants is considered Level
2 liability on the fair value hierarchy as the determination of fair values includes quoted warrants price, in a market that is
not active. Significant unobservable inputs for the Level 3 warrants liability include (1) the estimated probability of the occurrence
of a down round financing during the term over which the related warrants are exercisable, (2) the estimated magnitude of the
down round and (3) the estimated magnitude of any net cash fractional share settlement. There were no transfers between Levels
1, 2, and 3 during the three and nine months ended September 30, 2015 or 2014.
Note
8 - Stock-Based Compensation
Stock-based
compensation cost is included in selling, general and administrative expense in the accompanying unaudited consolidated statements
of operations and totaled approximately $21,900 and $12,400, for the three months ended September 30, 2015 and 2014, respectively,
and $61,700 and $411,500, for the nine months ended September 30, 2015 and 2014, respectively.
During
the nine months ended September 30, 2015, the Company issued 490,000 shares of common stock to a third party market advisory service.
The Company estimated the fair value of the common stock issued for services to be $98,000, which was recorded in other assets
as a deferred cost, and was amortized over the six month term of service to be provided, of which $98,000 was expensed in the
nine months ended September 30, 2015.
The
Company issued 246,998 options during the nine months ended September 30, 2015, with a grant date fair value of $36,714. At September
30, 2015, total unrecognized compensation expense related to unvested stock based awards granted prior to that date was approximately
$166,500, which is expected to be recognized over a weighted average period of 2.1 years.
During
the nine months ended September 30, 2015, the Company granted contingent stock-based awards for 50,000 shares to a consultant.
As of September 30, 2015, the performance criteria had not been met. The Company will begin recording expense for the fair value
of the equity instrument at the date it becomes probable that the performance target will be achieved.
Note
9 - Subsequent Event
On
October 20, 2015, the Company issued 490,000 shares of its common stock to a third party for market advisory services.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This
Quarterly Report on Form 10-Q, or Report, contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding, but not limited to, those relating to the following:
our ability to secure necessary financing; expected growth; future operating expenses; future margins; fluctuations in interest
rates; ability to continue to grow and implement growth, and regarding future growth, cash needs, operations, business plans and
financial results and any other statements that are not historical facts.
When
used in this Report, the words “anticipate,” “estimate,” “expect,” “may,” “plans,”
“project,” and similar expressions are intended to be among the statements that identify forward-looking statements.
Our results may differ significantly from the results discussed in the forward-looking statements. Such statements involve risks
and uncertainties, including, but not limited to, those relating to costs, delays and difficulties related to our dependence on
our ability to attract and retain skilled managers and other personnel; the intense competition within our industry; the uncertainty
of our ability to manage and continue our growth and implement our business strategy; our vulnerability to general economic conditions;
accuracy of accounting and other estimates; our future financial and operating results, cash needs and demand for services; and
our ability to maintain and comply with permits and licenses; as well as other risk factors described in our Annual Report on
Form 10-K for the year ended December 31, 2014, and in our other filings with the Securities and Exchange Commission (“SEC”),
and those identified in Part II, Item 1A entitled “Risk Factors” beginning on page 21 of this Report. Should one or
more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially
from those projected. We undertake no obligation to update these forward-looking statements.
As
used in this Form 10-Q, “we,” “us,” and “our” refer to Enerpulse Technologies, Inc. and its
wholly-owned subsidiary, Enerpulse, Inc., which is collectively referred to as the “Company.”
Overview
We
were incorporated in the state of Nevada on May 3, 2010 and currently conduct our operations primarily through our wholly-owned
subsidiary, Enerpulse, Inc., which was incorporated in the state of Delaware on January 20, 2004. We designed, developed and commercialized
a capacitor-based Precise Combustion Ignition (PCI) technology for use in the automotive original equipment manufacturer (OEM)
market and the automotive aftermarket. Our PCI technology, found in Enerpulse’s Pulstar® units, fits
directly into existing internal combustion (IC) engine systems and fuel delivery infrastructures. Unlike other solutions utilizing
electric and/or hybrid propulsion systems, our technology does not rely on massive changes to vehicle drive systems or fuel or
power infrastructures for its success. Our PCI technology is ready for immediate deployment into existing vehicles (aftermarket)
and the vast majority of new vehicles being produced around the world (OEM). Our headquarters are located in Albuquerque, New
Mexico.
Recent
Events
On
October 20, 2015, the Company issued 490,000 shares of its common stock for market advisory services.
Critical
Accounting Policies and Estimates
Our
consolidated financial statements and related notes included elsewhere in this Form 10-Q are prepared in accordance with U.S.
generally accepted accounting principles. The preparation of these consolidated financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities, net revenue, and expenses, and any related
disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable
under the circumstances. Changes in accounting estimates are reasonably likely to occur from period to period. Accordingly, actual
results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an
ongoing basis. To the extent that there are material differences between these estimates and our actual results, our future financial
statement presentation, financial condition, results of operations, and cash flows will be affected.
There
have been no material changes to our critical accounting policies and estimates discussed in our Annual Report on Form 10-K for
the year ended December 31, 2014, previously filed with the Security and Exchange Commission, or SEC, on March 31, 2015.
Recent
Accounting Pronouncements
For
information on the recent accounting pronouncements, which may impact our business, see Note 2 of the Notes to the Consolidated
Financial Statements included in this Quarterly Report on Form 10-Q.
Results
of Operations
The
following tables set forth selected consolidated financial data. We derived the selected consolidated statements of operations
data for the three and nine months ended September 30, 2015 and 2014, and the selected consolidated balance sheet data as of September
30, 2015 and December 31, 2014 from our unaudited consolidated financial statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results to be expected for any future
period.
The
following selected consolidated financial data should be read in conjunction with our consolidated financial statements and related
notes included elsewhere in this Quarterly Report on Form 10-Q.
| |
Three
Months Ended September 30, | | |
Nine
Months Ended
September 30, | |
| |
2015
| | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Statement of Operations Data: | |
| | | |
| | | |
| | | |
| | |
Sales | |
$ | 102,283 | | |
$ | 64,355 | | |
$ | 316,732 | | |
$ | 254,884 | |
Cost of sales | |
| 58,918 | | |
| 63,818 | | |
| 178,016 | | |
| 237,812 | |
Gross profit | |
| 43,365 | | |
| 537 | | |
| 138,716 | | |
| 17,072 | |
Selling, general
and administrative expenses | |
| 739,936 | | |
| 841,372 | | |
| 2,214,181 | | |
| 2,608,779 | |
Loss from operations | |
| (696,571 | ) | |
| (840,835 | ) | |
| (2,075,465 | ) | |
| (2,591,707 | ) |
Other income (expense),
net | |
| 265,010 | | |
| 22,303 | | |
| 329,135 | | |
| (394,006 | ) |
Net loss | |
$ | (431,561 | ) | |
$ | (818,532 | ) | |
$ | (1,746,330 | ) | |
$ | (2,985,713 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per common
and puttable share (basic and diluted) | |
$ | (0.03 | ) | |
$ | (0.06 | ) | |
$ | (0.12 | ) | |
$ | (0.27 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average of common shares
outstanding (basic and diluted) | |
| 15,022,381 | | |
| 13,732,381 | | |
| 14,638,608 | | |
| 11,149,963 | |
Weighted average of puttable shares
outstanding (basic and diluted) | |
| - | | |
| 79,914 | | |
| - | | |
| 113,974 | |
Balance Sheet
Data (at end of period): | |
September
30, 2015 | | |
December
31, 2014 | |
Cash and cash equivalents | |
$ | 849,400 | | |
$ | 17,077 | |
Working capital (deficit) | |
| 460,573 | | |
| (264,525 | ) |
Total assets | |
| 1,894,804 | | |
| 1,227,429 | |
Total liabilities | |
| 3,145,104 | | |
| 1,801,705 | |
Total stockholder' deficit | |
| (1,250,300 | ) | |
| (574,276 | ) |
Three
Months Ended September 30, 2015, Compared to Three Months Ended September 30, 2014
Sales
Our
sales increased by 58.9% from $64 thousand for the three months ended September 30, 2014 to $102 thousand for the three months
ended September 30, 2015, primarily due to reduced returns and allowances on product lifts by customers and an increase in NatGas
Industrial sales in the three months ended September 30, 2015.
Cost
of Sales
Our
cost of sales decreased by 7.7% from $64 thousand for the three months ended September 30, 2014 to $59 thousand for the three
months ended September 30, 2015, due to manufacturing process improvements, improved labor utilization and improved design and
operating procedures related to the release of Pulstar with PlasmaCore.
Gross
Profit
Our
gross profit increased from $1 thousand for the three months ended September 30, 2014 to $43 thousand for the three months ended
September 30, 2015 as a result of the increase in sales offset by decreased costs of sales driven by manufacturing process improvements,
improved labor utilization and improved design and operating procedures related to the release of Pulstar with PlasmaCore. The
gross profit margin was 42.4% for the three months ended September 30, 2015, which is higher than that of less than 1% for the
three months ended September 30, 2014, due primarily to the favorable impact of the above factors.
Selling,
General and Administrative Expenses
Our
selling, general and administrative expenses decreased by 12.1% from $841 thousand for the three months ended September 30, 2014
to $740 thousand for the three months ended September 30, 2015. The decrease is primarily as a result of a reduction of $85 thousand
in legal fees, $71 thousand in marketing expense and $30 thousand in contract production labor offset by an increase of $64 thousand
in consulting fees and $14 thousand in development prototypes.
Other
Income (Expense), Net
Other
income (expense), net increased to $265 thousand of net other income for the three months ended September 30, 2015 from $22 thousand
of net other income for the three months ended September 30, 2014. The increase is primarily related to an increase in fair values
of the warrants liability derivatives resulting in gains during the three months ended September 30, 2015 and 2014 of $446 and
$23 thousand and a $35 thousand gain in other income from a trademark settlement offset by increases in expense of $169 thousand
in warrant expense and $49 thousand of interest expense. The Company anticipates future other expense associated with the amortization
of the debt discounts and debt offering costs over the lives of the respective debt as interest expense.
Net
Loss and Loss Per Share
During
the three months ended September 30, 2015, we had a net loss of $432 thousand as compared to a net loss of $819 thousand for the
three months ended September 30, 2014 and the Company anticipates a net loss for the remainder of 2015. The decrease in operating
loss for the three months ended September 30, 2015 was due primarily to managing expenses and improved gross profit.
Loss
per share, both basic and diluted, for the three months ended September 30, 2015 and 2014, was $0.03 and $0.06 per share, respectively.
Nine
Months Ended September 30, 2015, Compared to Nine Months Ended September 30, 2014
Sales
Our
sales increased by 24.3% from $255 thousand for the nine months ended September 30, 2014 to $317 thousand for the nine months
ended September 30, 2015 primarily due to reduced returns and allowances on product lifts by customers and an increase in NatGas
Industrial sales in the nine months ended September 30, 2015.
Cost
of Sales
Our
cost of sales decreased by 25.1% from $238 thousand for the nine months ended September 30, 2014 to $178 thousand for the nine
months ended September 30, 2015, due to manufacturing process improvements, improved labor utilization and improved design and
operating procedures related to the release of Pulstar with PlasmaCore.
Gross
Profit
Our
gross profit increased from $17 thousand for the nine months ended September 30, 2014 to $139 thousand for the nine months ended
September 30, 2015 as a result of the increase in sales offset by decreased costs of sales driven by manufacturing process improvements,
improved labor utilization and improved design and operating procedures related to the release of Pulstar with PlasmaCore. The
gross profit margin was 43.8% for the nine months ended September 30, 2015, which is higher than that of 6.7% for the nine months
ended September 30, 2014, due primarily to the above factors.
Selling,
General and Administrative Expenses
Our
selling, general and administrative expenses decreased by 15.1% from $2,609 thousand for the nine months ended September 30, 2014
to $2,214 thousand for the nine months ended September 30, 2015, primarily as a result of the re-pricing and accelerated vesting
of outstanding stock options to purchase approximately 676,000 shares of our common stock previously granted to officers, directors,
employees and consultants, which resulted in additional stock-based compensation of approximately $32,000, as well as approximately
$293,000 associated with accelerating the unvested stock-based awards granted prior to that date as of September 30, 2014. In
addition, reductions of $39 thousand in legal fees, $94 thousand in marketing expense, $48 thousand in salaries expense, $84 thousand
in contract production labor, and $35 thousand in travel expense offset by increases of $119 thousand in consulting expense and
$99 thousand in reduced production labor and overhead recovery contributing to the overall decrease.
Other
Income/(Expense)
Other
income (expense) increased to $329 thousand for the nine months ended September 30, 2015 from ($394) thousand for the nine months
ended September 30, 2014. The change in other income (expense) is primarily related to modifications of derivative liabilities,
changes in fair values of the derivative liabilities, other income from a trademark settlement and less expense related to the
repayment of debt with outstanding warrants during the nine months ended September 30, 2015 versus the nine months ended September
30, 2014.
Net
Loss and Loss Per Share
During
the nine months ended September 30, 2015, we had a net loss of $1.7 million as compared to $3.0 million for the nine months ended
September 30, 2014. The decrease for the nine months ended September 30, 2015 was primarily as a result of the re-pricing and
accelerated vesting of outstanding stock options to purchase approximately 676,000 shares of our common stock previously granted
to officers, directors, employees and consultants as of September 30, 2014, the modifications of derivative liabilities, changes
in fair values of the derivative liabilities, and reduction in expense related to the repayment of debt with outstanding warrants.
Loss
per share, both basic and diluted, for the nine months ended September 30, 2015 and 2014, was $0.12 and $0.27 per share, respectively.
Liquidity
and Capital Resources
As
of September 30, 2015, we had cash and cash equivalents on hand of $849 thousand and working capital of $461 thousand. We expect
this amount to be sufficient to meet out operating and capital requirements until late 2015, and intend to use these funds for
general corporate purposes, including, salaries, development and commercial activity, and for working capital. Management’s
plans are to secure additional funding to cover working capital needs until positive cash flow from operations occurs, which is
anticipated to commence in 2016.
The
Company has a history of securing funding from various venture capital firms (approximately $22 million) since 2004. In addition,
the Company filed with the SEC, a Registration Statement on Form S-1 (the “Offering”), which was declared effective
by the SEC on May 13, 2014 for the public offering of 5,000,000 shares of common stock and 5,000,000 warrants to purchase up to
an aggregate of 7,500,000 shares of common stock. On May 16, 2014, the Company announced the pricing of the Offering and on May
21, 2014, the Company closed the Offering for 5,000,000 shares of its common stock and 5,000,000 warrants at an offering price
of $0.75 per share and $0.05 per warrant, resulting in gross proceeds of $4.0 million. During March 2014, the Company also received
$230,000 in financing in exchange for promissory notes with warrants, which funded the Company prior to the closing of the Offering.
On February 20, 2015, we closed on a private placement, through our placement agent, on a sale of senior secured convertible notes
with an aggregate principal amount of $3,049,000, which notes accrue interest at a 6% per annum and mature in 36 months. The notes
are convertible into 15,243,750 shares of our common stock. As part of the private placement, we also issued warrants exercisable
for up to 7,621,875 common shares at an exercise price of $0.20 per share. In its capacity as placement agent, we paid Roth and/or
its designees a commission equal to $210,000 consisting of (i) $50,000 in cash, (ii) 800,000 shares of our common stock and (iii)
warrants exercisable for up to 1,050,000 common shares at an exercise price of $0.20 per share.
Net
cash used in operating activities was $1.9 million and $2.4 million, respectively, for the nine months ended September 30, 2015
and 2014.
Net
cash used in investing activities was $55 thousand and $143 thousand for the nine months ended September 30, 2015 and 2014, respectively,
consisting of the purchase of equipment and ongoing patent filings to protect our intellectual property.
Net
cash provided by financing activities was $2.8 million and $2.9 million for the nine months ended September 30, 2015 and 2014,
respectively. During the three months ended March 31, 2015, we completed the private placement on a sale of senior secured convertible
notes with an aggregate principal amount of approximately $3,049,000 offset by debt offering costs paid in cash of approximately
$214,000. During the nine months ended September 30, 2014, we completed the Offering for $4.0 million, which was offset by $949
thousand of offering costs, repayment of notes payable for $230 thousand, and repayments on capital lease obligations of $5 thousand.
Our
cash position increased by $823 thousand and $370 thousand for the nine months ended September 30, 2015 and 2014, respectively,
for the reasons described above.
As
of September 30, 2015, we had outstanding notes payable totaling $3.3 million, of which $3.05 million is classified as long-term
and $216 thousand is considered short term. Interest expense incurred on all debt was $118 thousand and $13 thousand for the nine
months ended September 30, 2015 and 2014, respectively.
Our
base monthly expenses totaled approximately $250 thousand. Due to the launch of a targeted marketing initiative, revenues from
our automotive aftermarket segment are improving. Additional financing will be required in 2015 to fund research and development
(including patent development and protection, prototype development and third party testing) and commercial activities in the
automotive OEM and NatGas Industrial segments, which are our primary strategic markets.
There
can be no assurance that any financing transaction, if commenced, will be completed or as to the value that any such transaction
might have for our stockholders. Future cash flows are subject to a number of variables, including the level of production, economic
conditions and maintaining cost controls. There can be no assurance that operations and other capital resources will provide cash
sufficient to maintain planned or future levels of capital expenditures.
To
meet future business objectives, we will need to meet revenue targets and sell additional equity and debt securities, which most
likely will result in dilution to our current stockholders. Sales of equity or equity-linked securities, may result in further
dilution to current stockholders if the price protection provisions of the warrants issued in the Offering are triggered. Additionally,
the triggering of the price protection provisions lower the price at which shares of our common stock are issued upon exercise
of the warrants and, as a result, we will receive reduced proceeds upon the exercise of any such warrants for cash. We may also
pursue additional loans where the incurrence of indebtedness would result in increased debt service obligations and could require
us to agree to operating and financial covenants that would restrict operations. Any failure to raise additional funds on terms
favorable to us, or at all, could limit our ability to expand business operations and could harm overall business prospects. In
addition, we cannot be assured of profitability in the future.
As
a result of our losses from operations, minimal revenue generation and limited capital resources, our independent registered public
accounting firm’s report on our consolidated financial statements as of, and for the year ended December 31, 2014, includes
an explanatory paragraph discussing that these conditions raise substantial doubt about our ability to continue as a going concern.
Our ability to continue to pursue our plan of operations is dependent upon our ability to increase revenues and/or raise the capital
necessary to meet our financial requirements on a continuing basis.
Contractual
Obligations and Off-Balance Sheet Arrangements
Contractual
Obligations
As
a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this disclosure.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As
a smaller reporting company, we are not required to provide this disclosure.
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of our disclosure controls and procedures as of September 30, 2015. The term “disclosure controls and procedures,”
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), means controls
and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act
is accumulated and communicated to the company’s management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure. Based upon that evaluation, our principal executive officer
and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2015
in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.
Changes
in Internal Control over Financial Reporting
There
were no changes in the Company’s internal control over financial reporting during the third quarter 2015 that have materially
affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART
II. OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
None.
ITEM
1A. RISK FACTORS
There
have been no material changes in our risk factors since the filing of our Annual Report on Form 10-K for the year ended December
31, 2014, filed on March 31, 2015.
Item
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On
April 3, 2015, the company issued 490,000 shares of common stock to a third party market advisory service. The Company estimated
the fair value of the common stock issued to be $98,000.
The
issuance of shares to this advisor was exempt from registration in reliance upon Section 4(a)(2) of the Securities Act.
Item
3. DEFAULTS UPON SENIOR SECURITIES
None.
Item
4. Mine Safety Disclosures
Not
applicable.
Item
5. OTHER INFORMATION
None.
Item
6. EXHIBITS
Exhibit
Number |
|
Description
of Document |
|
|
|
3.1 |
|
Articles
of Incorporation (incorporated by reference to the Registrant’s Registration Statement on Form 10-12G filed on October
27, 2010) |
|
|
|
3.2 |
|
Certificate
of Correction to Articles of Incorporation (incorporated by reference to the Registrant’s Registration Statement on
Form 10-12G filed on October 27, 2010) |
|
|
|
3.3 |
|
Amendment
to Articles of Incorporation (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q/A filed on
August 21, 2013 for the fiscal quarter ended June 30, 2013) |
|
|
|
3.4 |
|
Amended
and Restated Bylaws (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 10,
2013) |
|
|
|
31.1 |
|
Certification
of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
|
|
|
31.2 |
|
Certification
of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
|
|
|
32.1 |
|
Certification
of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C 1350)* (1) |
|
|
|
32.2 |
|
Certification
of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C 1350)* (1) |
|
|
|
101 |
|
Interactive
Data File* |
|
* |
Filed
Herewith |
|
|
|
|
(1) |
Furnished
in accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section
18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated
by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that
the registrant specifically incorporates it by reference. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
Date:
November 12, 2015 |
Enerpulse
Technologies, Inc. |
|
|
|
|
By: |
/s/
Joseph E. Gonnella |
|
Name: |
Joseph
E. Gonnella |
|
Title: |
Chief
Executive Officer |
|
|
(Principal
Executive Officer) |
|
|
|
|
By: |
/s/
Bryan C. Templeton |
|
Name: |
Bryan
C. Templeton |
|
Title: |
Chief
Financial Officer |
|
|
(Principal
Financial Officer and Principal Accounting Officer) |
Exhibit
31.1
PRINCIPAL
EXECUTIVE OFFICER CERTIFICATION
I,
Joseph E. Gonnella, certify that:
1. |
I
have reviewed this Quarterly Report on Form 10-Q of Enerpulse Technologies, Inc.; |
|
|
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 statement made, in light of the circumstances under which 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 and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange 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 subsidiary, 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 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 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. |
/s/
Joseph E. Gonnella |
|
Joseph
E. Gonnella |
|
Chief
Executive Officer |
|
(Principal
Executive Officer) |
|
|
|
November
12, 2015 |
|
Exhibit
31.2
PRINCIPAL
FINANCIAL OFFICER CERTIFICATION
I,
Bryan C. Templeton, certify that:
1. |
I
have reviewed this Quarterly Report on Form 10-Q of Enerpulse Technologies, Inc.; |
|
|
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 statement made, in light of the circumstances under which 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 and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange 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 subsidiary, 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 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 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. |
/s/
Bryan C. Templeton |
|
Bryan
C. Templeton |
|
Chief
Financial Officer |
|
(Principal
Financial Officer and Principal Accounting Officer) |
|
|
|
November
12, 2015 |
|
Exhibit
32.1
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
I,
Joseph E. Gonnella, Chief Executive Officer of Enerpulse Technologies, Inc. (the “Company”), certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) |
The
Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2015 (the “Report”) fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
|
|
(2) |
The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company. |
/s/
Joseph E. Gonnella |
|
Joseph
E. Gonnella |
|
Chief
Executive Officer |
|
|
|
November
12, 2015 |
|
Exhibit
32.2
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
I,
Bryan Templeton, Chief Financial Officer of Enerpulse Technologies, Inc. (the “Company”), certify, pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) |
The
Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2015 (the “Report”) fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
|
|
(2) |
The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company. |
/s/
Bryan C. Templeton |
|
Bryan
C. Templeton |
|
Chief
Financial Officer |
|
|
|
November
12, 2015 |
|