808 RENEWABLE ENERGY CORP - Annual Report: 2014 (Form 10-K)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

☑		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

or

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number   333-184319

 

(Exact name of Registrant as specified in its charter)

 

Nevada	80-0651522
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

 

13888 Harbor Blvd. Ste. 8A

(Address of principal executive offices and zip code)

 

Registrant's Telephone Number, Including Area Code: (714) 891 8282

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.001 par value	none

  

.

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 the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o
Non –accelerated filer o		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐     No ý

 

As of June 30, 2014, the last business day of the registrant's most recently completed second fiscal quarter, the Company's common stock had not begun to trade and therefore there was no market value of the voting shares of the registrant held by non-affiliates.  However, an aggregate of 30,583,035 shares of common stock was held directly or by affiliates and officers of the registrant and have been included in the number of shares held by affiliates.

 

On June 29, 2015, the Company had 4,416,000 series D preferred shares and 70,261,668 common shares outstanding.

 

 

 

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WARNING CONCERNING FORWARD-LOOKING STATEMENTS

 

 

 

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808 RENEWABLE ENERGY CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014

 

TABLE OF CONTENTS

 

 

 

 

	Page
PART I
ITEM 1. BUSINESS	4
ITEM 1A. RISK FACTORS	5
ITEM 1B. UNRESOLVED STAFF COMMENTS	10
ITEM 2. PROPERTIES	11
ITEM 3. LEGAL PROCEEDINGS	11
ITEM 4. MINE SAFETY DISCLOSURES	11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	11
ITEM 6. SELECTED FINANCIAL DATA	12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	17
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	33
ITEM 9A. CONTROLS AND PROCEDURES	33
ITEM 9B. OTHER INFORMATION	33
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	34
ITEM 11. EXECUTIVE COMPENSATION	35
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	38
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	38
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES	39
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	40

 

 

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2014  Fiscal Year	High Bid				Low Bid
Fourth Quarter: 10/1/14 to 12/31/14		$	0.75			$	0.15
Third Quarter: 7/1/14 to 9/30/14		$	3.50			$	0.20
2015  Fiscal Year	High Bid				Low Bid
Second Quarter: 4/1/15 to 6/30/15		$	0.66			$	0.12
First Quarter: 1/1/15 to 3/31/15		$	0.44			$	0.07

Plan category	Number of securities to be issued upon exercise of  outstanding options, warrants or rights	Weighted average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected  as outstanding)
Equity Compensation Plans approved by security holders	-	-	-

 

 

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INDEX TO FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm		19
Balance Sheets at December 31, 2014 and 2013		20
Statements of Operations for the years ended December 31, 2014 and 2013		21
Statements of Stockholders' Equity for the years ended  December 31, 2014 and 2013		22
Statements of Cash Flows for the years ended December 31, 2014 and 2013		23
Notes to Financial Statements		24

 

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

808 Renewable Energy Corporation

Garden Grove, California

We have audited the accompanying balance sheets of 808 Renewable Energy Corporation (the "Company") as of December 31, 2014 and 2013 and the related statements of operations, changes in stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 808 Renewable Energy Corporation as of December 31, 2014 and 2013 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations. These raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MaloneBailey, LLP

www.malone-bailey.com

Houston, Texas

July 13, 2015

 

 

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		December 31,
		2014				2013
Assets
Current assets
Cash and cash equivalents		$	4,006,824			$	197,385
Accounts receivable-net			44,111				126,223
Prepaid expenses and other current assets			90,276				48,488
Total current assets			4,141,211				372,096
Long term assets
Project assets, net			2,902,277				4,882,190
Property, plant and equipment, net			179,645				229,689
Deposits			38,459				38,459
Total long term assets			3,120,381				5,150,338
Total assets		$	7,261,592			$	5,522,434
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses		$	479,749			$	549,777
Finance contracts payable			7,698				43,859
Total current liabilities			487,447				593,636
Stockholders' equity
Series A Preferred stock, $0.001 par value, 20,000,000 shares authorized;
2,215,259  issued and outstanding as of December 31, 2014 and 2013,
respectively.			2,215				2,215
Series D Preferred stock, no par value; 8,000,000 shares authorized; 4,416,000
issued and outstanding as of December 31, 2014; none issued as
of December 31, 2013.			5,520,000				-
Common stock, $0.001 par value, 100,000,000 shares authorized;
70,261,668 and 68,611,668  shares issued and outstanding
as of December 31, 2014 and  2013, respectively.			70,262				68,612
Treasury stock - 716,990 shares			(250,122	)			-
Additional paid in capital			21,015,622				19,892,272
Accumulated deficit			(19,583,832	)			(15,034,301	)
Total stockholders' equity			6,774,145				4,928,798
Total liabilities and stockholders' equity		$	7,261,592			$	5,522,434

 

 

See accompanying notes to  financial statements

 

 

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		For the years ended
		December 31,
		2014				2013
Revenue, net		$	415,333			$	1,060,423
Gain on sale of project asset			-				196,261
			415,333				1,256,684
Cost of goods sold			863,167				1,441,967
Gross  (loss)			(447,834	)			(185,283	)
Operating expenses
Accounting fees			122,474				101,060
Telephone and internet			25,463				32,296
Rent expense			112,851				112,532
Travel and entertainment			4,473				32,022
Legal and other professional fees			51,277				75,406
Payroll			673,142				331,500
Insurance			124,094				152,316
Impairment expense			1,684,334				-
General and administrative expenses			1,279,162				174,219
Total operating expenses			4,077,270				1,011,351
Loss from operations			(4,525,104	)			(1,196,634	)
Other expense
Interest expense			24,427				3862
Loss for the period			(4,549,531	)			(1,200,496	)
Deemed dividends			(5,375,969	)			-
Cumulative dividend-Series D Preferred			(60,000	)			-
Net loss attributable to common shareholders		$	(9,985,500	)		$	(1,200,496	)
Basic and diluted loss per share		$	(0.14	)		$	(0.02	)
Weighted average shares outstanding
Basic and diluted			69,531,531				68,621,278

 

 

See accompanying notes to financial statements

 

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808 Renewable Energy Corporation
Statements of Changes in Stockholders' Equity
		Preferred A								Preferred D																Treasury Stock								Additional
		Shares				Par				Shares				No Par Value				Common Shares				Par				Shares				Par				Paid In Capital				Accumulated Deficit				Stockholders' Equity
Balances at December 31, 2012			2,215,259			$	2,215				-			$	-				68,624,517			$	68,625			$	-			$	-			$	19,892,259			$	(13,833,805	)		$	6,129,294
Common stock canceled			-				-				-				-				(12,849	)			(13	)			-				-				13				-				-
Loss for the year ended December 31, 2013			-				-				-				-				-				-				-				-				-				(1,200,496	)			(1,200,496	)
Balances at December 31, 2013			2,215,259				2,215				-				-				68,611,668				68,612				-				-				19,892,272				(15,034,301	)			4,928,798
Common shares issued for past services			-				-				-				-				1,650,000				1,650				-				-				1,123,350				-				1,125,000
Preferred D shares issued for cash			-				-				4,416,000				5,520,000				-				-				-				-				-				-				5,520,000
Discount on the preferred stock related to the beneficial conversion feature			-				-				-				(5,375,969	)			-				-				-				-				5,375,969				-				-
Accretion of discount as deemed dividend			-				-				-				5,375,969				-				-				-				-				(5,375,969	)			-				-
Treasury stock			-				-				-				-				-				-				(716,990	)			(250,122	)			-				-				(250,122	)
Loss for the year ended December 31, 2014			-				-				-				-				-				-				-				-				-				(4,549,531	)			(4,549,531	)
Balances at December 31, 2014			2,215,259			$	2,215				4,416,000			$	5,520,000				70,261,668			$	70,262				(716,990	)		$	(250,122	)		$	21,015,622			$	(19,583,832	)		$	6,774,145

 

See accompanying notes to  financial statements

 

 

 

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808 Renewable Energy Corporation

Statements of Cash Flow

	For the years ended
	December 31,
		2014				2013
Cash flows from operating activities
Net loss		$	(4,549,531	)		$	(1,200,496	)
Adjustments to reconcile net loss to cash used in operating
activities
Depreciation expense			374,609				395,050
Bad debt expense			-				20,918
Impairment of fixed assets			1,684,334				-
Write off of inventory			-				104,987
Gain on sale of project asset			-				(196,261	)
Stock based compensation			1,125,000				-
(Increase) decrease in current assets
Accounts receivable			82,112				179,645
Prepaid expenses and other current assets			26,212				108,550
Deposits			-				(9,959	)
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses			(20,355	)			247,641
Net cash provided by  (used in) operating activities			(1,277,619	)			(349,925	)
Cash flows from investing activities
Proceeds from sale of asset			-				436,250
Acquisition of project assets			(28,986	)			(177,176	)
Acquisition of property and equipment			-				(108,750	)
Net cash used in  investing activities			(28,986	)			150,324
Cash flows from financing activities
Repayment of finance contract			(104,161	)			(71,095	)
Proceeds from sale of preferred stock			5,520,000				-
Cash used to repurchase common shares			(250,122	)			-
Proceeds from related party debt			550,100
Repayment of related party debt			(599,773	)
Net cash provided by  financing activities			5,116,044				(71,095	)
Net increase (decrease) in cash and cash equivalents			3,809,439				(270,696	)
Cash and cash equivalents, beginning balance			197,385				468,081
Cash and cash equivalents, ending balance		$	4,006,824			$	197,385
Supplementary information
Cash paid during the year for:
Interest		$	24,285			$	3,862
Income taxes		$	800			$	-
Supplementary disclosure for non cash investing and
financing activities
Settlement of liabilities through related party debt		$	49,673			$	-
Deemed dividend on the Series D Preferred stock			5,375,969				-
Financing insurance premium			68,000				57,514
Discount on the preferred stock related to BCF			5,375,969				-

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

NOTE 1 - ORGANIZATION AND OPERATIONS

 

808 Renewable Energy Corporation, (the "Company", "808 Renewable", "we", or "us"), located in Garden Grove, California, was incorporated, on May 13, 2009, in Nevada as Tri-Energy, Inc. for the purpose of acquiring and managing combined heat and power renewable energy products, also referred to as distributed generation energy facilities. The Company is also engaged in the business of purchase and sale of power generation equipment, and in the operation, repair, and maintenance of same, for itself, as well as for other energy facility owners.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cost of sales is the direct cost associated with the earning of revenue and predominantly includes the cost and transportation of natural gas commodity, cost of obtaining the air permits, licenses, payroll and payroll related costs and the rent of the sites where the energy producing plants are located.

   

For purposes of the statements of cash flows, cash equivalents include all highly liquid investments with original maturities of three months or less which are not securing any corporate obligations. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Accounts receivable are stated at the amount management expects to collect from outstanding balances.  Accounts receivable as of December 31, 2014 and December 31, 2013, includes amounts for energy and other services provided to customers.  An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectable based on historical experience and management's evaluation of outstanding accounts receivable at the end of the period. Bad debts are written off against the allowance when identified. The Company determined that $20,918 was required at December 31, 2013 and no allowance was required as at December 31, 2014.

Prepaid expenses consist primarily of short-term prepaid expenditures that will amortize within one year.

 

Property and equipment consists primarily of leasehold improvements, office equipment and computer equipment, and is recorded at historical cost. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that do not improve or extend the life of the respective assets, are expensed as incurred. Depreciation and amortization of property and equipment are computed on a straight-line basis over the following estimated useful lives:

Asset Classification		Estimated Useful Life
Furniture and office equipment		Seven years
Computer equipment and software costs		Three years
Leasehold improvements		Lesser of term of lease or five years
Automobiles		Three years

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

Project assets consist of costs of materials, direct labor, outside contract services and project development costs incurred in connection with the construction of the small-scale renewable energy plants that the Company owns.  Depreciation is, generally, recorded on a straight line basis beginning in the month that operations commence over the assets estimated useful lives ranging from 10 to 20 years. Routine maintenance costs, to the extent that they do not extend the life of the asset, are expensed in the year they are incurred.

 

The Company evaluates the recoverability of its long-lived assets if circumstances indicate impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated from such assets. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company recognized impairment expense of $1,684,334 and $0 for the years ended December 31, 2014 and 2013, respectively.

The Company derives revenue from energy efficiency and renewable energy products and services, which includes the design, engineering, and construction of energy systems that produce electricity, heat or cooling from renewable sources of energy. The Company enters into long-term energy sales agreements (with a typical term of 10 to 15 years) with customers, whereby these energy systems are owned by the Company and are installed in customers' buildings. As of December 31, 2014 and 2013, the Company had four and six operating energy systems, respectively.

Each month, the Company obtains readings from its energy meters to determine the amount of energy produced for each customer. The Company multiplies these readings by the appropriate published price of energy (electricity) from its customers' local energy utility, and the energy services agreement entered into with each customer, to derive the value of the monthly energy sales, less the applicable negotiated discount.  The Company's revenues per customer, on a monthly basis, will vary based on the amount of energy produced by its energy systems and the published price of energy (electricity, natural gas or oil) obtained from its customers' local energy utility.

The Company recognizes revenue when it is realized or realizable and earned, and therefore only recognizes revenue on energy systems once those systems become operational. The Company recognizes revenue from the sale of equipment upon installation and recognizes revenue on professional services in accordance with the contract entered into with the customer.

 

The Company must meet all of the following four criteria in order to recognize revenue:

·	Persuasive evidence of an arrangement exists

·	Delivery has occurred

·	The sales price is fixed or determinable

·	Collection is reasonably assured

Payments received in advance of satisfaction of the relevant criteria for revenue recognition are recorded as advances from customers.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2014 and 2013.

The Company records stock-based compensation at fair value as of the date of grant and recognizes the corresponding expense over the requisite service period (usually the vesting period), utilizing the Black-Scholes option-pricing model. The volatility component of the calculation is based on the historic volatility of the Company's stock or the expected future volatility. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The Company evaluates any long-term energy purchase contracts pursuant to ASC 815 to determine whether they qualify for derivative accounting.   In May 2012 the Company entered into a 24 month fixed price natural gas supply agreement with a major vendor.  This contract met the normal sales and purchases exception provided for under ASC 815.  As such, related transactions under this contract are not marked to market and are reflected in results of operations when the underlying transactions settle.

The carrying amounts reported in the balance sheets for accounts receivable and payables, inventory and debt are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and, if applicable, the stated rate of interest is equivalent to rates currently available.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs.  The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows:

Level 1:

inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets

 

Level 2:

inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

Level 3:

inputs to the valuation methodology are unobservable and significant to the fair value

 

The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

Basic earnings per share are calculated dividing income available to common stockholders by the weighted average number of common shares outstanding.  Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants and options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.  There were no dilutive shares, options or warrants outstanding as of December 31, 2014 and December 31, 2013.  

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

NOTE 3 - GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, during the year ended December 31, 2014 the Company incurred a net loss attributable to common shareholders of $9,985,500, which included a deduction for a deemed dividend to Preferred D Stockholders of $5,375,969; a deduction for stock based compensation of $1,125,000; and a deduction for impairment of long term assets of $1,684,334, compared to a net loss of $1,200,496, for the year ended December 31, 2013.    The Company's accumulated deficit was $19,583,832 and $15,034,301 as of December 31, 2014 and December 31, 2013, respectively.  If the Company is unable to generate profits and is unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether.  These factors raise substantial doubt about the Company's ability to continue as a going concern.

The financial statements do not include any adjustment relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company is taking certain steps to provide the necessary capital to continue its operations. These steps included, but are not limited to: 1) focus on sales to minimize the need for capital at this stage; 2) converting part of the outstanding accounts payable to equity; 3) raising equity financing; 4) continuous focus on reductions in cost where possible.

 

 NOTE 4 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the unamortized Directors and Officers liability insurance premium and the unamortized portion of the general liability insurance premium.

NOTE 5 - PROJECT ASSETS

Project assets consisted of the following as of:

 

	December 31
	2014			2013
Co-generation equipment	$	4,194,764			$	6,126,191
Less: accumulated depreciation		(1,292,487	)			(1,244,001	)
	$	2,902,277			$	4,882,190

Depreciation expense for project assets for the years ended December 31, 2014 and 2013 was $326,865 and $343,410, respectively.  These amounts are included in cost of goods sold in the statements of operations.

During the years ended December 31, 2014 and  2013 the Company recognized impairment expense on co-generation equipment of $1,684,334 and $0, respectively.  The impairment was recognized due to the termination of several energy service contracts related to the co-generation equipment in those locations.

During the year ended December 31, 2013, the Company sold the co-generation equipment in the 50 Beale Street location to a third party for $2 million with an initial payment of $463,250.  The buyer issued a note on the remaining amount of $1,563,750 which is subject to annual interest of 3% and required quarterly payments of $11,526 beginning on May 1, 2014 and will continue for an additional 20 quarters at which time the balance shall be due and payable. In accordance with ASC605-10-25, the Company recognized revenue on the sale in accordance with the cost recovery method.   As such, only the excess of the initial payment over the net book value of the asset of $196,261 was recognized into income during the year ended December 31, 2013.  No profit is recognized on the principal and interest due to the Company until cash payments are received from the buyer.  No additional payments have been received to-date.

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of:

		December 31
		2014				2013
Computers		$	30,149			$	30,149
Trucks			21,500				21,500
Furniture and fixtures			225,766				225,766
Leasehold improvements			97,379				99,679
			374,794				377,094
Less: accumulated depreciation			(195,149	)			(147,405	)
		$	179,645			$	229,689

Depreciation expense for the years ended December 31, 2014 and 2013 was $47,744 and $51,640 respectively. These amounts are included in general and administrative expenses in the statements of operations.

 

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following as of:

		2014				2013
Trade accounts payable		$	453,933			$	499,804
Accrued professional fees			22,500				46,251
Uncashed dividend checks			3,316				3,722
		$	479,749			$	549,777

 NOTE 8 – FINANCE CONTRACTS PAYABLE

During 2014, the Company financed the acquisition of its directors and officers insurance through a finance contract in the amounts of   $68,000 plus interest at an annual  rate of 4% requiring nine equal monthly payments of $7,698.  As of December 31, 2014, the balance on this loan amounted to $7,698.  During 2013, the Company financed the acquisition of, both, its liability and directors and officers insurance through finance contracts in the amounts of $44,000 and $13,515 , respectively.  The loans bore annual interest of 9.78% and 10.53% and each required nine equal monthly payments of $5,090 and $1,568, respectively.  As of December 31, 2013, the balance on these loans amounted to $43,859.

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

 

NOTE 9 - RELATED PARTY TRANSACTIONS

 

On August 8, 2013, the Company entered into a revolving note agreement with the CEO, Patrick S. Carter, pursuant to which the Company may borrow up to $1,000,000. The revolving note bears annual interest of 10%, matures on August 7, 2014 and is secured by the assets of the Company.  The Company had drawn $550,100 from the revolving note.  The CEO also paid, on behalf of the Company, $49,673 of its outstanding payables.   The total liability to the CEO of $599,773 was fully paid as of December 31, 2014.

Commencing August 1, 2013 the Company entered into a fifteen year lease agreement, with Patrick S. Carter, our CEO and his wife Parvaneh Carter, to lease the Company's office and warehouse facility on a gross lease of $8,000 per month.

On September 30, 2014, a member of our Board of Directors subscribed to 1,600,000 preferred shares at a cost of $1.25 per share for total proceeds of $2 million. On December 31, 2014, the same director subscribed to an additional 2,800,000 preferred shares on the same terms and conditions as the previous transaction for total proceeds of $3.5 million.

NOTE 10 - STOCKHOLDERS' EQUITY

During the year ended December 31, 2013, the Company recorded the cancelation of 12,849 common shares that had been erroneously issued. There were no issuances of common stock for the years ended December 31, 2014 and December 31, 2013.

The Company is authorized to issue 5,500,000 shares of Series A preferred stock.

The holders of Series A preferred stock have no dividend rights, no voting rights and no conversion rights. The Corporation has the right, but not the obligation, to the extent it may lawfully do so, at any time and from time to time to repurchase and redeem from the holders all or any portion of the then outstanding shares of Series A preferred stock at $1 per share.

There were no issuances of the Redeemable Series A preferred stock for the years ended December 31, 2014 and 2013.

The Company is authorized to issue 5,000,000 shares of Series B preferred stock.

The holders of Series B preferred stock shall have the right to receive dividends at the rate of $0.12 per share, when and if declared by the board. These dividends will be cumulative. Each share of Series B shall be convertible into common stock at the option of the holder at any time after the date of issuance.

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

There were no issuances of the Convertible Series B preferred stock for the year ended December 31, 2013.

 

NOTE 11 - STOCK INCENTIVE PLAN

The Company maintains an Incentive and Non-Statutory Stock Option Plan ("Plan") for its employees and consultants. Options granted under this Plan to an employee of the Company become exercisable over a period of no longer than ten (10) years and no less than twenty percent (20%) of the shares are exercisable annually. Options are not exercisable, in whole or in part, prior to one (1) year from the date of grant unless the Board specifically determines otherwise, as provided.

Two types of options may be granted under these Plans: (1) Incentive Stock Options (also known as Qualified Stock Options) which may only be issued to employees of the Company and whereby the exercise price of the option is not less than the fair market value of the common stock on the date it was reserved for issuance under the Plan; and (2) Non-statutory Stock Options which may be issued to either employees or consultants of the Company and whereby the exercise price of the option is less than the fair market value of the common stock on the date it was reserved for issuance under the plan. Grants of options may be made to employees and consultants without regard to any performance measures. All options issued pursuant to the Plan are nontransferable and subject to forfeiture.

There were no stock options granted in 2014 or 2013.

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

NOTE 12– INCOME TAXES

Income taxes for the years ended December 31, 2014and December 31, 2013 are summarized as follows:

		December 31,
		2014				2013
Current:
Federal		$	-			$	-
State			-				-
Deferred benefit			(658,876	)			(563,479	)
Change in valuation allowance			658,876				563,479
Income tax expense		$	-			$	-

 

Through December 31, 2014 and December 31, 2013, the Company incurred net operating losses for tax purposes of approximately   $7,084,218 and $5,699,542 respectively.

The net operating loss carry forward for federal and state purposes may be used to reduce taxable income through the year 2034. The availability of the Company's net operating loss carry forward is subject to limitation if there is a 50% or more positive change in the ownership of the Company's stock.

Components of the deferred tax assets are limited to the Company's net operating loss carry forwards, and are presented in the table below.  A 100% valuation allowance has been established against the deferred tax assets, as the utilization of the loss carry forward cannot reasonably be assured.  

		December 31,
		2014				2013
Net operating loss carry forward		$	7,084,218			$	5,699,542
Deferred tax assets, net			2,833,687				2,279,817
Valuation allowance			(2,833,687	)			(2,279,817	)
Net deferred tax assets		$	-			$	-

Differences between the benefit from income taxes and income taxes at the statutory federal income tax rate are as follows for the years ended December 31, 2014 and 2013:

		2014								2013
Tax expense (benefit) at federal statutory rate		$	(1,546,840	)			-34	%		$	(408,169	)			-34	%
State taxes, net of federal benefit			(272,972	)			-6	%			(72,030	)			-6	%
Disallowed expenses			1,123,334				25	%			-				-
Depreciation			37,602				1	%			251				-
Other			-				-				8,367				1	%
Change in valuation allowance			658,876				14	%			471,581				40	%
Tax expense at actual rate		$	-			$	-			$	-			$	-

 

 

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808 Renewable Energy Corporation

Notes to Financial Statements

December 31, 2014 and 2013

 NOTE 13–COMMITMENTS and CONTINGENCIES

Operation, Monitoring and Maintenance Agreement with 50 Beale Street Energy, LLC – On November 8, 2013 the Company, as an independent contractor, entered into an agreement, with 50 Beale Street Energy, LLC, to operate, monitor and maintain the facility located at 50 Beale Street, San Francisco, for a fee of $2,000 per month plus reimbursable expenses, payable quarterly for 120 months plus, by agreement of the parties, additional terms of three periods of 60 months each.

 

 

NOTE 14 – SUBSEQUENT EVENTS

On January 14, 2015, the Company paid Patrick Carter $2,215,259 to redeem the 2,215,259 series A preferred shares which he owned, and cancelled them.

 

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Item 9:      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None

 

Item 9A:    Controls and Procedures.

 

 As required by paragraph (b) of Rules 13a‐15 or 15d‐15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and principal financial officer evaluated our disclosure controls and procedures (as defined in Rules 13a‐15(e) and 15d‐15(e) of the Exchange Act) as of the end of the period covered by this report on Form 10‐K. Based on this evaluation, management concluded that as of the end of the period covered by this transition report on Form 10‐K, these disclosure controls and procedures were ineffective. The ineffectiveness of our disclosure controls and procedures was due to material weaknesses identified in our internal control over financial reporting, described below. Because of the inherent limitations in all control systems, our management believes that no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision‐making can be faulty and that breakdowns can occur because of simple error or mistake.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes‐Oxley Act, our management, with the participation of our principal executive officer and principal financial officer has conducted an assessment., Our system of internal control over financial reporting is designed 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Our management, including our principal executive officer and our principal financial officer, conducted an evaluation of the design and operation of our internal control over financial reporting as of December 31, 2014. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over financial reporting was not effective as at December 31, 2014. The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation of duties and ineffective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

Our company plans to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this report on Form 10‐K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2015: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) is largely dependent upon our company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision‐making can be faulty and that breakdowns can occur because of simple error or mistake.

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the fourth quarter of our fiscal year ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This Annual Report on Form 10-K does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report on Form 10-K.

Item 9B:   Other Information.

 

None

 

 

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Part III

 

Item 10:  Directors, Executive Officers and Corporate Governance.

 

The following table sets forth information about our executive officers and directors as of the date of this prospectus:

Name	Age	Position
Executive officers
Patrick S. Carter	43	Founder, Chairman of the Board, CEO, President, CFO, Secretary and Director
Peter Kirkbride	50	Chief Operating Officer and Director
Directors
Thomas P. Grainger	59	Director
Michael Gustason	43	Director
J. David Likens	41	Director

 

Executive Officers

 

Patrick S. Carter is the founder of our company and has served as our Chairman of the Board, CEO, President, CFO and Secretary and as a director since our inception, except that Mr. Carter did not serve as our CEO from September 20, 2010 to November 29, 2011, during which time Pascal Lorthioir served as our CEO. See "Executive Compensation—Summary Compensation Table." From August 19, 2008 to April 23, 2012, Mr. Carter was the managing member of 808 Energy 2, LLC.  Mr. Carter has held Series 3, Series 7 and Series 66 securities licenses, Health, Life, Disability and Annuity licenses and a Futures and Options Principal license. Mr. Carter also is a Certified Wealth Management Expert.

 

We believe that Mr. Carter possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience as a commodities broker, his knowledge and experience in raising capital and his experience in the CHP industry.

 

Peter Kirkbride has served as our Chief Operating Officer and as a director since August 2012. From May 2010 to July 2012, Mr. Kirkbride served as Director of Finance for our company and for 808 Energy 3, LLC. From August 2009 to April 2010, Mr. Kirkbride was a Series 7 & 66 registered representative with BrokersXpress. From April 2008 to August 2009, Mr. Kirkbride served as a registered representative for Bank of America's Premier Bank. From December 2004 to April 2008, Mr. Kirkbride served as a financial advisor with UBS Financial Services. Mr. Kirkbride received his BA in Liberal Arts from the University of California, Santa Barbara. Mr. Kirkbride has held Series 3, Series 7 and Series 66 securities licenses as well as a California insurance license.

 

We believe that Mr. Kirkbride possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience operating our company's CHP plants, his knowledge of the alternative energy industry and his knowledge and experience in financing activities.

 

Directors

 

Thomas P. Grainger has served as a director of our company since August 2012. Since December 1989, Mr. Grainger has directed operations for the sporting consultancy, Silvertip Adventures, LLC, which Mr. Grainger founded.

 

We believe that Mr. Grainger possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience as an investor in emerging growth companies and as a board member and his knowledge about growth strategies for developing businesses. Mr. Grainger is a business owner and investor with strong ties to the business world. We believe that Mr. Grainger's experience with corporate governance practices also will help our company comply with legal and industry standards.

Michael Gustason has served as a director of our company since October 9, 2012. Since April 1995, Mr. Gustason has owned and operated a successful furniture gallery located in Santa Barbara, California, which he founded. Mr. Gustason's furniture gallery is one of the leading retail stores in Santa Barbara County, furnishing local residents, hotels, County facilities and other large corporate accounts, such as University of California Santa Barbara, Colburn School of Music and Vandenberg Air Force Base.

 

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We believe that Mr. Gustason possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience as a business owner and as a board member. As a business owner, Mr. Gustason founded and developed a successful marketing network in California. We believe that Mr. Gustason's experience will help our company develop better marketing networks and competitive marketing strategies.

 

J. David Likens has served as a director of our company since October 9, 2012. Mr. Likens is a member of the State Bar of California. Since March 2012, Mr. Likens has been a named partner with Jeong & Likens, LC, a full service corporate law firm in Los Angeles, California. Before joining Jeong & Likens, LC, from September 2009, Mr. Likens engaged in private practice as an attorney. Since September 2011, Mr. Likens has been an adjunct professor at California Desert Trial Academy College of Law. Since February 2009, Mr. Likens has been an adjunct professor at Mt. San Antonio College in Walnut, California. Since December 2007, Mr. Likens has been the CEO of ABC Recovery Center in Indio, California. Mr. Likens received his JD from Southwestern School of Law, his BS in Business with an emphasis on Organizational Management from University of La Verne and an AA in liberal studies and an AA in addiction treatment from Mt. San Antonio College.

 

We believe that Mr. Likens possesses specific attributes that qualify him to serve as a member of our board of directors, including his undergraduate degree with an emphasis on Organizational Management as well as his law degree and his experience serving as a director of a public company.

 

Item 11:    Executive Compensation.

Mr. Carter's employment agreement with us, effective as of August 1, 2010, provides that our company will pay Mr. Carter an annual base salary of not less than $375,000.  Mr. Carter elected not to receive the annual base salary otherwise payable to Mr. Carter in 2012 under his employment agreement with us, as amended in March 2011.  In March 2011, our company and Mr. Carter entered into an amendment to our employment agreement with Mr. Carter, pursuant to which the term of his employment agreement commenced effective as of January 1, 2012 and will continue for a period of five consecutive years, unless earlier terminated. Pursuant to the employment agreement, as amended by this amendment, Mr. Carter will be entitled to compensation in addition to his base salary then in effect in the nature of a cash bonus that will be payable every quarter, at the rate of 25% of the annual rate for his base salary then in effect.   Because Mr. Carter declined to receive the compensation and bonuses as required by the contract, the total amounts of compensation and bonuses were treated as contributed to the Company.

On January 1, 2013, the August 1, 2010 employment agreement was further amended to reduce the compensation and bonuses to $1.00 for the 2013 fiscal year.

During the year ended December 31, 2014 Mr. Carter was paid $360,000.

Mr. Kirkbride was paid total compensation of $150,000 for each of the years ended December 31, 2014 and 2013 respectively.

  

Employment Agreements

Patrick S. Carter. In August 2010, we entered into an employment agreement with Mr. Patrick S. Carter, our founder, Chairman of the Board, CEO, President, CFO and Secretary. Under our employment agreement with Mr. Carter, Mr. Carter is required to perform the duties and function of his office and capacity under the supervisory authority of our board of directors. The employment agreement provides for an initial term of five years (commencing on August 1, 2010) and automatic one-year renewals thereafter, unless the employment agreement is terminated by advance written notice of either party. Under the terms of the employment agreement, Mr. Carter is entitled to receive a base salary in the amount of $375,000 per annum, subject to such adjustments as our board of directors may approve from time to time, and Mr. Carter also is entitled to participate in and receive such other benefits and compensation (including, without limitation, any profit sharing or stock option plan) that our company may furnish to other management personnel or employees generally. The employment agreement further provides that Mr. Carter is entitled to 20 vacation days per fiscal year and reimbursement of all reasonable expenses incurred in connection with the performance of his duties under the employment agreement.

 

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In March 2011, our company and Mr. Carter entered into an amendment to our employment agreement with Mr. Carter, pursuant to which the term of his employment agreement commenced effective as of January 1, 2012 and will continue for a period of five consecutive years, unless earlier terminated. Pursuant to the employment agreement, as amended by this amendment, Mr. Carter will be entitled to compensation in addition to his base salary then in effect in the nature of a cash bonus that will be payable every quarter, at the rate of 25% of the annual rate for his base salary then in effect. In connection with entering into this amendment to our employment agreement with Mr. Carter, Mr. Carter agreed to relinquish all remuneration that otherwise would have accrued under his employment agreement with us from April 1, 2011 to December 31, 2011. For the period of January 1, 2011 through March 31, 2011, we paid an aggregate amount of $105,000 to Mr. Carter under his employment agreement with us. For the period of January 1, 2012 through December 31, 2012, we paid no compensation to Mr. Carter under our employment agreement with Mr. Carter pursuant to Mr. Carter's election not to receive amounts otherwise payable to Mr. Carter there under for that period.

In January 2013, our company and Mr. Carter entered into an additional amendment to our employment agreement with Mr. Carter, pursuant to which, under our employment agreement with Mr. Carter as amended by this amendment, Mr. Carter agreed to a salary and cash bonus of one dollar ($1.00) for the year commencing as of January 1, 2013 and ending December 31, 2013, and Mr. Carter irrevocably waived all right, title and interest in and to any amounts that would be owed or otherwise payable to Mr. Carter by our company under our employment agreement with Mr. Carter for the period commencing as of January 1, 2013 through December 31, 2013. In addition, pursuant to this amendment to our employment agreement with Mr. Carter, Mr. Carter acknowledged that, as of January 1, 2013, our company owed no additional compensation to Mr. Carter under our employment agreement with Mr. Carter for any period that precedes January 1, 2013 or for the period commencing January 1, 2013 through December 31, 2013.  Also pursuant to this amendment to our employment agreement with Mr. Carter, the term of Mr. Carter's employment agreement commenced effective as of January 1, 2013 and will continue for a period of five years, unless earlier terminated.

 

We may terminate the employment agreement with Mr. Carter for cause or by reason of his death or disability. Mr. Carter may terminate the employment agreement for any reason by advance written notice. If the employment agreement is terminated by reason of death or disability, then our company will be required to pay to Mr. Carter or his spouse, heirs or representatives a severance amount equal to 12 months' base salary plus all reimbursable expenses incurred through the date of termination. If we terminate the employment agreement for cause or if Mr. Carter terminates the employment agreement other than for good reason, then Mr. Carter will be entitled to the base salary earned and payment of any unused accrued vacation through and including the date of termination.  If Mr. Carter terminates the employment agreement for good reason or if we terminate the employment agreement for any reason not specified above, then Mr. Carter will be entitled to remaining base salary otherwise payable during the initial term (but not less than 12 months) and expenses incurred through the date of termination.

 

Under the terms of the employment agreement with Mr. Carter, we are required to purchase directors' and officers' liability insurance if we provide such insurance to our other executives and such insurance is available at commercially reasonable rates. If our company merges with or is acquired by another company, the acquiring company will be required to assume our rights and obligations under the employment agreement with Mr. Carter.

 

Additionally, as a condition to the enforceability of the employment agreement, Mr. Carter and our company entered into a Proprietary Information and Invention Assignment Agreement in substantially the same form as has been or will be executed by our other key employees.

 

Peter Kirkbride. We entered into an unwritten employment arrangement with Mr. Peter Kirkbride, our Chief Operating Officer. Mr. Kirkbride is required to perform the duties and function of his office and capacity under the supervisory authority of our board of directors. Our employment arrangement with Mr. Kirkbride is an at-will employment arrangement. Under the terms of the employment arrangement, Mr. Kirkbride is entitled to receive a base salary in the minimum amount of $120,000 per annum, subject to such adjustments as our board of directors may approve from time to time. Mr. Kirkbride also is entitled to an annual discretionary cash bonus as determined by the compensation committee or our board of directors.  Mr. Kirkbride also is entitled to participate in and receive such other benefits and compensation (including, without limitation, any profit sharing or stock option plan) that our company may furnish to other management personnel or employees generally. Pursuant to our employment arrangement with Mr. Kirkbride, Mr. Kirkbride is entitled to 20 vacation days per fiscal year and reimbursement of all reasonable expenses incurred in connection with the performance of his duties for us.  We may terminate our employment arrangement with Mr. Kirkbride at any time for any reason or no reason, and Mr. Kirkbride may terminate our employment arrangement with him at any time for any reason or no reason, by advance written notice. The employment arrangement with Mr. Kirkbride does not provide for or contemplate any severance benefit in connection with any such termination, except that Mr. Kirkbride will be entitled to receive reimbursement of reasonable expenses incurred in connection with the performance of his duties for us before and through the date of termination.

 

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Pension Benefits

 

We do not maintain any pension plan or arrangement under which our named executive officers are entitled to participate or receive post-retirement benefits.

 

Non-Qualified Deferred Compensation

 

We do not maintain any nonqualified deferred compensation plans or arrangements under which our named executive officers are entitled to participate.

Employee Benefit Plans

 

2009 Stock Incentive Plan

 

In May 2009, our board of directors adopted, with stockholder approval, our company's 2009 Stock Incentive Plan. In March 2010 and in September 2010, in each case with stockholder approval, our board of directors amended our company's 2009 Stock Incentive Plan. In what follows below, our company's 2009 Stock Incentive Plan, as so amended, is referred to herein as the 2009 Plan.

 

Under the 2009 Plan, options and other rights to purchase up to an aggregate of 9,800,000 shares of common stock have been reserved for issuance upon exercise of options and other rights granted to our employees, directors and consultants. All options and other rights issued or granted under the 2009 Plan will have and be subject to the terms and conditions set forth in the 2009 Plan and the respective agreements governing such options and other rights.

At the date of this filing there are no options outstanding to purchase shares of our common stock under our company's 2009 Stock Incentive Plan.

 

If an option granted under the 2009 Plan expires or terminates, the shares subject to any unexercised portion of that option will become available again for the grant of additional options under the 2009 Plan. Options may be granted under the 2009 Plan that are intended to qualify as "incentive stock options" under Section 422 of the Internal Revenue Code or, alternatively, as options that will not so qualify, commonly referred to as non statutory options. The 2009 Plan will terminate automatically on May 21, 2019, and our company will not be able to grant more options under the 2009 Plan after it has terminated.

 

Our board of directors or a committee designated by our board of directors is authorized under the 2009 Plan to determine the terms and conditions of each option granted under the 2009 Plan. Nonetheless, the exercise price of an incentive stock option cannot be less than the fair market value of the common stock on the date of grant (110.0% if granted to an employee who owns 10.0% or more of the outstanding common stock), and the exercise price of a non statutory option cannot be less than 85.0% of the fair market value of the common stock on the date of grant. No option can have a term in excess of 10 years (five years if granted to an employee owning 10.0% or more of our outstanding common stock), and no incentive stock option can be granted to anyone other than a full-time employee of our company or its subsidiaries.

 

Our board of directors or a committee designated by our board of directors also is authorized under the 2009 Plan to award or sell shares of common stock reserved under the 2009 Plan pursuant to a stock purchase agreement that must be adopted and approved by our board of directors or a committee designated by our board of directors. Every such award or sale will be subject to all applicable terms and conditions of the 2009 Plan and may be subject to other terms and conditions that are not inconsistent with the 2009 Plan and that our board of directors or the committee appointed by our board of directors deems appropriate for inclusion in such stock purchase agreement. The provisions of such stock purchase agreements entered into under the 2009 Plan need not be identical.

 

In the event that our company is a party to a merger or reorganization, outstanding stock options granted under the 2009 Plan will be subject to the agreement of merger or reorganization.

 

Our board of directors may amend the 2009 Plan at any time and may terminate the 2009 Plan at any time before its automatic termination on May 21, 2019. Rights and obligations under any right or stock option granted before amendment of the 2009 Plan may not be materially altered or impaired adversely by such amendment, except with consent of the person to whom such right or stock option was granted.

 

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Compensation of Directors

 

Our company's directors currently do not receive any cash compensation for service on our company's board of directors or any committee thereof, but they may be reimbursed for certain expenses in connection with attendance at meetings of our company's board of directors and committees thereof. During the year ended December 31, 2014, each director was issued 100,000 restricted common shares for past services.  From time to time, we may grant to our directors options to purchase shares of our company's capital stock and provide them with other incentive-based forms of compensation payable in our company's securities.

 

Peter Kirkbride, our Chief Operating Officer, received compensation, for carrying out those duties, of $150,000 and $150,000 for the 2014 and 2013 years respectively.

Item 12:    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

Security Ownership

 

The following table sets forth, as of July 6, 2015, certain information known to us with respect to the beneficial ownership of our common stock by (i) each of our directors, (ii) each of our named executive officers, (iii) all of our directors and current executive officers as a group, and (iv) each shareholder known by us to be the beneficial owner of more than five percent (5%) of our common stock.

 

Name and Address of Beneficial owner	Title of Class	Amount and Nature of Beneficial ownership		Percent of Class
Patrick S. Carter	Common shares	11,605,969	direct	16.50%
Thomas P. Grainger	Common shares	14,373,515	direct	20.5%
Peter Kirkbride	Common shares	2,204,700	direct	3.10%
Michael Gustason	Common shares	100,000	direct	0.00%
David Likens	Common shares	100,000	direct	0.00%
Directors and Executive Officers as a Group (5 persons)	Common shares	28,384,184	direct	40.10%
5% shareholders	Common shares	none		none

 

Changes in Control

 

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our company.

 

 

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Item 14:    Principal Accountant Fees and Services.

The fees billed for professional services rendered by our principal accountants, MaloneBailey, LLP for audit services are as follows:

 

Year		Audit  Fees				Audit Related Fees				Tax Fees				All Other Fees
2014		$	20,000			$	-			$	-			$	-
2013		$	25,000			$	-			$	-			$	-

 

 

 

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PART IV

Item 15:    Exhibits

 

Exhibit No.		Description
31.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302
32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of The Sarbanes-Oxley Act of 2004

 

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101.INS		XBRL Instance Document
101SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

 

* XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

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SIGNATURES

 

Date:  July 13, 2015	808 Renewable Energy Corporation
	(Registrant)
	By:		/s/ Patrick Carter
			President, Treasurer and Secretary

	By:	/s/ Patrick Carter
		President, Treasurer and Secretary

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