Filed Pursuant to Rule 424(b)(3)
Registration No. 333-203199
PROSPECTUS SUPPLEMENT NO. 2
22,484,531 Shares
of Common Stock
ENERPULSE TECHNOLOGIES, INC.
This
Prospectus Supplement No. 2 supplements and amends our Prospectus dated April 14, 2015. This Prospectus Supplement No.
2 includes our attached Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2015, as filed with the Securities
and Exchange Commission on August 14, 2015.
The
Prospectus, any prospectus supplements filed before the date hereof, and this Prospectus Supplement No. 2 relate to the resale
by the selling stockholders identified in the Prospectus of up to 22,484,531 shares of our common stock, par value $0.01 per share.
The shares of common stock covered by the Prospectus include shares of common stock issued or issuable upon conversion of our senior
secured convertible notes in an aggregate principal amount of $3,048,750 which were issued in connection with a private placement
financing.
This
Prospectus Supplement No. 2 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be deemed to be modified or superseded to the extent that information in this Prospectus Supplement No. 2 modifies or supersedes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 Any statement that is modified or superseded shall not be deemed to constitute a part of the Prospectus
except as modified or superseded by this Prospectus Supplement No. 2.
Our common stock is
quoted on the OTCQB under the symbol “ENPT.” On August 13, 2015, the closing price for our common stock was $0.015.
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 10 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. 2 IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The
date of this Prospectus Supplement No. 2 is August 14, 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 June 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 |
(I.R.S. Employer |
Incorporation or Organization) |
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 August 13, 2015: 15,022,381.
ENERPULSE TECHNOLOGIES,
INC.
FORM 10-Q
FOR
THE QUARTER ENDED June 30,
2015
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENERPULSE TECHNOLOGIES,
INC.
CONSOLIDATED BALANCE SHEETS
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(Unaudited) | | |
| |
ASSETS | |
| | | |
| | |
Current Assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 1,419,543 | | |
$ | 17,077 | |
Accounts receivable, net | |
| 93,982 | | |
| 73,572 | |
Inventory | |
| 293,413 | | |
| 337,297 | |
Other current assets | |
| 82,377 | | |
| 22,981 | |
Total current assets | |
| 1,889,315 | | |
| 450,927 | |
Intangible assets, net of accumulated amortization of $145,126 (2015) and $128,444
(2014) | |
| 474,440 | | |
| 483,982 | |
Property and equipment, net | |
| 147,234 | | |
| 173,963 | |
Other assets | |
| 9,413 | | |
| 118,557 | |
Total assets | |
$ | 2,520,402 | | |
$ | 1,227,429 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts payable | |
$ | 323,806 | | |
$ | 554,747 | |
Accrued expenses | |
| 155,277 | | |
| 135,968 | |
Current portion of capital lease obligations | |
| 24,737 | | |
| 24,737 | |
Total current liabilities | |
| 503,820 | | |
| 715,452 | |
Long-Term Liabilities | |
| | | |
| | |
Capital lease obligations, net of current portion | |
| 8,929 | | |
| 20,778 | |
Notes payable, net of offering costs and discounts | |
| 1,452,410 | | |
| 248,225 | |
Warrants liability | |
| 1,395,328 | | |
| 817,250 | |
| |
| 2,856,667 | | |
| 1,086,253 | |
Total liabilities | |
| 3,360,487 | | |
| 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 June 30, 2015 and December 31, 2014, respectively; $0.001 par value | |
| 15,023 | | |
| 13,733 | |
Additional paid-in capital | |
| 27,860,739 | | |
| 26,812,046 | |
Note receivable, related party | |
| (205,122 | ) | |
| (204,100 | ) |
Accumulated deficit | |
| (28,510,725 | ) | |
| (27,195,955 | ) |
Total stockholders' deficit | |
| (840,085 | ) | |
| (574,276 | ) |
Total liabilities and stockholders' deficit | |
$ | 2,520,402 | | |
$ | 1,227,429 | |
See notes to accompanying unaudited consolidated
financial statements.
ENERPULSE TECHNOLOGIES,
INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS
(Unaudited)
| |
Three Months Ended | | |
Six Months Ended | |
| |
June 30, | | |
June 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Sales | |
$ | 104,491 | | |
$ | 93,365 | | |
$ | 214,449 | | |
$ | 190,529 | |
Cost of sales | |
| 61,791 | | |
| 83,150 | | |
| 119,098 | | |
| 173,994 | |
Gross profit | |
| 42,700 | | |
| 10,215 | | |
| 95,351 | | |
| 16,535 | |
Selling, general and administrative expenses | |
| 848,983 | | |
| 1,068,931 | | |
| 1,474,246 | | |
| 1,767,407 | |
Loss from operations | |
| (806,283 | ) | |
| (1,058,716 | ) | |
| (1,378,895 | ) | |
| (1,750,872 | ) |
Other income (expense), net | |
| | | |
| | | |
| | | |
| | |
Fair value adjustments of derivative liabilities | |
| (443,152 | ) | |
| (322,733 | ) | |
| 319,478 | | |
| (322,733 | ) |
Interest | |
| (47,915 | ) | |
| (8,614 | ) | |
| (68,924 | ) | |
| (11,294 | ) |
Amortization of debt discount | |
| (170,053 | ) | |
| - | | |
| (233,491 | ) | |
| - | |
Other income (expense) | |
| 511 | | |
| (74,852 | ) | |
| 47,062 | | |
| (82,282 | ) |
Other income (expense), net | |
| (660,609 | ) | |
| (406,199 | ) | |
| 64,125 | | |
| (416,309 | ) |
Net loss | |
$ | (1,466,892 | ) | |
$ | (1,464,915 | ) | |
$ | (1,314,770 | ) | |
$ | (2,167,181 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per common share (basic and diluted) | |
$ | (0.10 | ) | |
$ | (0.13 | ) | |
$ | (0.09 | ) | |
$ | (0.22 | ) |
Net loss per puttable common share (basic and diluted) | |
$ | - | | |
$ | (0.13 | ) | |
$ | - | | |
$ | (0.22 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares outstanding (basic
and diluted) - common | |
| 15,006,226 | | |
| 10,930,183 | | |
| 14,421,442 | | |
| 9,837,353 | |
Weighted average number of shares
outstanding (basic and diluted) - puttable common | |
| - | | |
| 131,287 | | |
| - | | |
| 131,287 | |
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 | |
| - | | |
| - | | |
| - | | |
| (1,022 | ) | |
| - | | |
| (1,022 | ) |
Stock-based compensation expense | |
| - | | |
| - | | |
| 39,843 | | |
| - | | |
| - | | |
| 39,843 | |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,314,770 | ) | |
| (1,314,770 | ) |
Balances, June 30, 2015 | |
| 15,022,381 | | |
$ | 15,023 | | |
$ | 27,860,739 | | |
$ | (205,122 | ) | |
$ | (28,510,725 | ) | |
$ | (840,085 | ) |
See notes to accompanying unaudited consolidated
financial statements.
ENERPULSE TECHNOLOGIES,
INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
| |
Six Months Ended | |
| |
June 30, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Cash Flows From Operating Activities | |
| | | |
| | |
Net loss | |
$ | (1,314,770 | ) | |
$ | (2,167,181 | ) |
Adjustments to reconcile net loss to net cash used in operating
activities: | |
| | | |
| | |
Stock-based compensation | |
| 88,843 | | |
| 399,192 | |
Amortization | |
| 16,682 | | |
| 14,730 | |
Depreciation | |
| 27,081 | | |
| 25,542 | |
Amortization of repricing of warrants on notes payable | |
| - | | |
| 52,005 | |
Amortization of debt discounts | |
| 233,491 | | |
| - | |
Loss on modification of derivative liabilities | |
| - | | |
| 31,356 | |
Fair value adjustments of derivative instruments | |
| (319,478 | ) | |
| 322,733 | |
Interest on note receivable, related party | |
| (1,022 | ) | |
| (1,011 | ) |
Provision for doubtful accounts | |
| 8,971 | | |
| 2,210 | |
Provision for obsolete: Inventory | |
| 19,535 | | |
| - | |
Loss on disposal of equipment | |
| 8,000 | | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| (29,381 | ) | |
| 35,516 | |
Inventory | |
| 24,349 | | |
| (24,171 | ) |
Accounts payable | |
| (122,198 | ) | |
| (141,928 | ) |
Accrued expenses | |
| 19,309 | | |
| (436 | ) |
Other | |
| (9,995 | ) | |
| 3,085 | |
Net cash used in operating activities | |
| (1,350,583 | ) | |
| (1,448,358 | ) |
| |
| | | |
| | |
Cash Flows From Investing Activities | |
| | | |
| | |
Purchase of property and equipment | |
| (8,352 | ) | |
| (24,522 | ) |
Purchase of intangible assets | |
| (7,140 | ) | |
| (41,217 | ) |
Net cash used in investing activities | |
| (15,492 | ) | |
| (65,739 | ) |
| |
| | | |
| | |
Cash Flows From Financing Activities | |
| | | |
| | |
Proceeds from issuance of common stock and related warrants,
net of offering costs | |
| - | | |
| 3,116,966 | |
Proceeds from notes payable, net of offering costs | |
| 2,830,390 | | |
| 230,000 | |
Payments on capital lease and notes
payable | |
| (61,849 | ) | |
| (234,893 | ) |
Net cash provided by financing activities | |
| 2,768,541 | | |
| 3,112,073 | |
Net increase in cash and cash equivalents | |
| 1,402,466 | | |
| 1,597,976 | |
Cash and cash equivalents at beginning of year | |
| 17,077 | | |
| 281,607 | |
Cash and cash equivalents at end
of year | |
$ | 1,419,543 | | |
$ | 1,879,583 | |
| |
| | | |
| | |
Supplement cash flow information: | |
| | | |
| | |
Cash paid for interest | |
$ | 2,763 | | |
$ | 11,294 | |
| |
| | | |
| | |
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 resulting from change in
value of puttable common stock | |
| - | | |
| 93,780 | |
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.
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 $1,379,000 for the six months ended June 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 $1,351,000 for the six months ended June 30, 2015 and has
working capital of approximately $1,385,000 at June 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 late 2015. 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
November 3, 2014, the Company entered into an engagement letter with the Company’s placement agent in connection with a
capital raise from accredited investors of approximately $3.0 million of the Company’s equity or equity-linked securities.
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 June 30, 2015 and December 31,
2014, respectively. No interest is charged on late accounts. No material amounts were written off during the three and six months
ended June 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 June 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 June 30, 2015 and 2014 were approximately $88,000 and $96,000, respectively. The amounts charged for the
six months ended June 30, 2015 and 2014 were approximately $184,000 and $172,000, 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 June 30, | |
| |
2015 | | |
2014 | |
| |
Common | | |
Common | | |
Puttable | |
Weighted average shares of stock used
in basic and diluted loss per share | |
| 15,006,226 | | |
| 10,930,183 | | |
| 131,287 | |
| |
| | | |
| | | |
| | |
Allocation of net loss | |
$ | (1,466,892 | ) | |
$ | (1,447,528 | ) | |
$ | (17,387 | ) |
| |
| | | |
| | | |
| | |
Basic and diluted net loss
per share | |
$ | (0.10 | ) | |
$ | (0.13 | ) | |
$ | (0.13 | ) |
| |
For the six months ended
June 30, | |
| |
2015 | | |
2014 | |
| |
Common | | |
Common | | |
Puttable | |
Weighted average shares of stock used
in basic and diluted loss per share | |
| 14,421,442 | | |
| 9,837,353 | | |
| 131,287 | |
| |
| | | |
| | | |
| | |
Allocation of net loss | |
$ | (1,314,770 | ) | |
$ | (2,138,639 | ) | |
$ | (28,542 | ) |
| |
| | | |
| | | |
| | |
Basic and diluted net loss
per share | |
$ | (0.09 | ) | |
$ | (0.22 | ) | |
$ | (0.22 | ) |
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 2.4 million for the three months ended June 30, 2015 and 2014, respectively,
and 35.1 million and 4.2 million for the six months ended June 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. As of June 30, 2015 and
December 31, 2014, the Company had recorded a reserve of approximately $19,500 and $8,600, respectively.
Inventory consisted of
the following:
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Raw materials | |
$ | 196,906 | | |
$ | 219,449 | |
Work in process | |
| 37,307 | | |
| 38,962 | |
Finished goods | |
| 59,200 | | |
| 78,886 | |
| |
| | | |
| | |
Total inventory | |
$ | 293,413 | | |
$ | 337,297 | |
Note 4 - Property and
Equipment, Net
Property and equipment, net, consisted of the
following:
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Vehicles | |
$ | 22,679 | | |
$ | 22,679 | |
Software and equipment | |
| 800,128 | | |
| 802,849 | |
Furniture and fixtures | |
| 26,143 | | |
| 23,071 | |
Leasehold improvements | |
| 254,137 | | |
| 254,137 | |
| |
| 1,103,087 | | |
| 1,102,736 | |
Less accumulated depreciation | |
| (955,853 | ) | |
| (928,773 | ) |
| |
| | | |
| | |
Total property and equipment, net | |
$ | 147,234 | | |
$ | 173,963 | |
Note 5 - Notes Payable
Notes payable consisted
of the following:
| |
June 30, | | |
December 31, | |
| |
2015 | | |
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 June 30, 2015 and December 31, 2014; unsecured; due 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 | |
| (1,350,948 | ) | |
| (18,046 | ) |
Offering Costs | |
| (461,663 | ) | |
| - | |
| |
| | | |
| | |
Long-term portion | |
$ | 1,452,410 | | |
$ | 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 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.
The Company estimated
the relative fair value of the common stock and warrants issued with the convertible notes to be approximately $890,000 combined
(see Note 7), which is recognized as additional interest expense over the term of the outstanding related notes.
Total debt offering costs
of approximately $509,000 included placement agent commissions, underwriter’s commissions, legal fees, consulting services,
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 (see Note 5),
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 up to and including the February 20, 2015 debt offering. 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 Company estimated the relative fair value
of the warrants to be approximately $7,300, which is recognized as warrant expense during the three months ended March 31, 2015.
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, and Publicly Registered Warrants, with their related
down-round or net cash settlement provisions, should be treated as a derivative and thus classified as warrants liability in the
accompanying June 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 binomial
option pricing model (“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 asset | |
| 62,737 | | |
| (17,655 | ) | |
| (14,560 | ) | |
| (350,000 | ) | |
| (319,478 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at June 30, 2015 | |
$ | 988,043 | | |
$ | 2,145 | | |
$ | 5,140 | | |
$ | 400,000 | | |
$ | 1,395,328 | |
| |
Non-Equity | | |
| | |
| |
| |
Offering | | |
Resale | | |
Compensation | |
| |
Warrants | | |
Warrants | | |
Warrants | |
June 30, 2015: | |
| | | |
| | | |
| | |
Annual volatility | |
| 87.84% - 90.21 | % | |
| 87 | % | |
| 90 | % |
Risk-free rate | |
| 0.64% - 1.63 | % | |
| 1.01 | % | |
| 1.01 | % |
Dividend rate | |
| - | % | |
| - | % | |
| - | % |
Contractual term | |
| 1.85 - 4.64 | | |
| 3.2 | | |
| 3.9 | |
Closing price of common stock | |
$ | 0.175 | | |
$ | 0.175 | | |
$ | 0.175 | |
Conversion/exercise price | |
$ | 0.20 - 1.00 | | |
$ | 2.66 | | |
$ | 1.00 | |
Origination: | |
| | | |
| | | |
| | |
Annual volatility | |
| 81.96% - 82.14 | % | |
| | | |
| | |
Risk-free rate | |
| 1.22% - 1.61 | % | |
| | | |
| | |
Dividend rate | |
| - | % | |
| | | |
| | |
Contractual term | |
| 4.75 - 5.00 | | |
| | | |
| | |
Closing price of common stock | |
$ | 0.235 - 0.200 | | |
| | | |
| | |
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 six months ended June 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 $70,300 and $362,100, for the three months ended June 30, 2015 and 2014, respectively, and $88,800 and
$399,200, for six months ended June 30, 2015 and 2014, respectively.
During the three months
ended June 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 deferred cost, and
is being amortized over the six month term of service to be provided.
The Company issued 225,000
options during the three and six months ended June 30, 2015. At June 30, 2015, total unrecognized compensation expense related
to unvested stock based awards granted prior to that date was approximately $185,000, which is expected to be recognized over
a weighted average period of 2.4 years.
During the three
months ended March 31, 2015, the Company granted contingent stock-based awards for 50,000 shares to a consultant. As of June
30, 2015, the performance criteria had not been met. The Company will begin recording the fair value of the equity instrument
at the date the performance is probable.
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 20 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
None
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 six months ended June 30, 2015 and 2014, and the selected consolidated balance sheet data as of June 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 | | |
Six Months Ended | |
| |
June 30, | | |
June 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Statement of Operations Data: | |
| | | |
| | | |
| | | |
| | |
Sales | |
$ | 104,491 | | |
$ | 93,365 | | |
$ | 214,449 | | |
$ | 190,529 | |
Cost of sales | |
| 61,791 | | |
| 83,150 | | |
| 119,098 | | |
| 173,994 | |
Gross profit | |
| 42,700 | | |
| 10,215 | | |
| 95,351 | | |
| 16,535 | |
Selling, general and administrative expenses | |
| 848,983 | | |
| 1,068,931 | | |
| 1,474,246 | | |
| 1,767,407 | |
Loss from operations | |
| (806,283 | ) | |
| (1,058,716 | ) | |
| (1,378,895 | ) | |
| (1,750,872 | ) |
Other income (expense), net | |
| (660,609 | ) | |
| (406,199 | ) | |
| 64,125 | | |
| (416,309 | ) |
Net loss | |
$ | (1,466,892 | ) | |
$ | (1,464,915 | ) | |
$ | (1,314,770 | ) | |
$ | (2,167,181 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per common and puttable share (basic and diluted) | |
$ | (0.10 | ) | |
$ | (0.13 | ) | |
$ | (0.09 | ) | |
$ | (0.22 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average of common shares outstanding (basic and diluted) | |
| 15,006,226 | | |
| 10,930,183 | | |
| 14,421,442 | | |
| 9,837,353 | |
Weighted average of puttable shares outstanding (basic and diluted) | |
| - | | |
| 131,287 | | |
| - | | |
| 131,287 | |
| |
June 30, | | |
December 31, | |
Balance Sheet Data (at end of period): | |
2015 | | |
2014 | |
Cash and cash equivalents | |
$ | 1,419,543 | | |
$ | 17,077 | |
Working capital (deficit) | |
| 1,385,495 | | |
| (264,525 | ) |
Total assets | |
| 2,520,402 | | |
| 1,227,429 | |
Total liabilities | |
| 3,360,487 | | |
| 1,801,705 | |
Total stockholder' deficit | |
| (840,085 | ) | |
| (574,276 | ) |
Three Months Ended
June 30, 2015, Compared to Three Months Ended June 30, 2014
Sales
Our sales increased by
11.9% from $93 thousand for the three months ended June 30, 2014 to $104 thousand for the three months ended June 30, 2015, primarily
due to the spring marketing campaign started in the second quarter 2015 versus starting in the third quarter 2014.
Cost of Sales
Our cost of sales decreased
by 25.7% from $83 thousand for the three months ended June 30, 2014 to $62 thousand for the three months ended June 30, 2015,
due to manufacturing process improvements, improved labor utilization and improved design and operating procedures related to
the release of Pulstar with PlasmaCore. The raw materials “component costs” are primarily driven by a few key items.
The center electrode, the shell containing the ground electrode, and the insulator are all standard components to a conventional
spark plug, but can have the most negative impact to the material cost of a finished good. Most materials are not unique and are
easily obtained through various suppliers, but at low volume with landed cost for each component can double the price if flown
air freight versus on the ocean or by ground.
Gross Profit
Our gross profit increased
by 318% from $10 thousand for the three months ended June 30, 2014 to $43 thousand for the three months ended June 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 procedure related to the release of Pulstar with PlasmaCore. The gross profit margin
was 40.9% for the three months ended June 30, 2015, which is higher than that of 10.8% for the three months ended June 30, 2014,
due primarily to the favorable impact of the above factors on the period ended June 30, 2015.
Selling, General and
Administrative Expenses
Our selling, general
and administrative expenses decreased by 20.6% from $1,069 thousand for the three months ended June 30, 2014 to $849 thousand
for the three months ended June 30, 2015. The decrease is primarily as a result of additional expense in 2014 due to 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.
Other Income (Expense),
Net
Other income
(expense), net increased to $661 thousand of net other expense for the three months ended June 30, 2015 from $406 thousand of
net other expense for the three months ended June 30, 2014. The increase is primarily related to decreases in fair values of
the warrants liability derivatives resulting in losses during the three months ended June 30, 2015 and 2014 of $443 and $323
thousand. 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 Income (Loss) and
Income (Loss) Per Share
During the three months
ended June 30, 2015, we had a net loss of $1,467 thousand as compared to a net loss of $1,465 thousand for the three months ended
June 30, 2014 and the Company anticipates a net loss for the remainder of 2015. The decrease in operating loss for the three months
ended June 30, 2015 after adjusting for the fair value adjustments of derivative liabilities was due primarily to managing expenses
and improved gross profit.
Income (loss) per share,
both basic and diluted, for the three months ended June 30, 2015 and 2014, was ($0.10) and ($0.13) per share, respectively.
Six Months Ended June
30, 2015, Compared to Six Months Ended June 30, 2014
Sales
Our sales increased by
12.6% from $191 thousand for the six months ended June 30, 2014 to $214 thousand for the six months ended June 30, 2015 as a result
of new stocking orders by performance and international retailers.
Cost of Sales
Our cost of sales decreased
by 31.6% from $174 thousand for the six months ended June 30, 2014 to $119 thousand for the six months ended June 30, 2015, due
to manufacturing process improvements, improved labor utilization and improved design and operating procedures related to the
release of Pulstar with PlasmaCore. The raw materials “component costs” are primarily driven by a few key items. The
center electrode, the shell containing the ground electrode, and the insulator are all standard components to a conventional spark
plug, but can have the most negative impact to the cost of a finished good. Most materials are not unique and are easily obtained
through various suppliers, but at low volume landed cost for each component can double the price if flown air freight versus ocean
or ground freight.
Gross Profit
Our gross profit increased
by 476.7% from $17 thousand for the six months ended June 30, 2014 to $95 thousand for the six months ended June 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 procedure related to the release of Pulstar with PlasmaCore. The gross profit
margin was 44.5% for the six months ended June 30, 2015, which is higher than that of 8.6% for the six months ended June 30,
2014, due primarily to the above factors impacting favorably on June 30, 2015.
Selling, General and
Administrative Expenses
Our selling, general
and administrative expenses decreased by 17.2% from $1,767 thousand for the six months ended June 30, 2014 to $1,463 thousand
for the six months ended June 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 June 30, 2014.
Other Income/(Expense)
Other income (expense)
increased to $64 thousand for the six months ended June 30, 2015 from ($416) thousand for the six months ended June 30,
2014. The decrease in other expense is primarily related to modifications of derivative liabilities, changes in fair values of
the associated assets of the derivative liabilities, and less expense related to the repayment of debt with outstanding warrants
during the six months ended June 30, 2015 versus the six months ended June 30, 2014.
Net Income (Loss) and
Income (Loss) Per Share
During the six months
ended June 30, 2015, we had a net loss of $1.3 million as compared to $2.2 million for the six months ended June 30,
2014. The decrease for the six months ended June 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 June 30, 2014, the modifications of derivative liabilities, changes in fair values of the associated
assets of the derivative liabilities, and less expense related to the repayment of debt with outstanding warrants. Loss per share,
both basic and diluted, for the six months ended June 30, 2015 and 2014, was $0.09 and $0.22 per share, respectively.
Liquidity and Capital
Resources
As of June 30, 2015,
we had cash and cash equivalents on hand of $1,420 thousand and working capital of $1,385 thousand. We expect this amount to be
sufficient to meet out operating and capital requirements until late 2015, and intent 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 early 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 $1.4 million and $1.4 million, respectively, for the six months ended June 30, 2015 and 2014.
Net cash used in investing
activities was $15 thousand and $66 thousand for the six months ended June 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 $3.1 million for the six months ended June 30, 2015 and 2014, respectively. During the
six 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
six months ended June 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 $1.4 million and $1.6 million for the six months ended June 30, 2015 and 2014, respectively, for the reasons described above.
As of June 30, 2015,
we had outstanding notes payable totaling $3.3 million, which is classified as long-term. Interest expense incurred on all debt
was $69 thousand and $11 thousand for the six months ended June 30, 2015 and 2014, respectively.
Our base monthly expenses
totaled approximately $250 thousand. However, 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 and NatGas
OEM 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 June 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 June 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.
Our management team will
continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial
reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements,
as necessary and as funds allow.
Changes in Internal Control
over Financial Reporting
There were no changes
in the Company’s internal control over financial reporting during the second 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 (see Note 8).
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: August 14, 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) |
|
August 14, 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) |
|
August 14, 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 June 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 |
|
August 14, 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 June 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 |
|
August 14, 2015 |
|