ORIGINCLEAR, INC. - Quarter Report: 2008 June (Form 10-Q)
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
(Mark
One)
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x
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
FOR
THE QUARTERLY PERIOD ENDED JUNE 30, 2008
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o
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR
THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION
FILE NUMBER ________________
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ORIGINOIL,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
(State
or other jurisdiction of incorporation or organization)
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26-0287664
(I.R.S.
Employer Identification No.)
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2029
Century Park East, 14th
Floor
Los
Angeles, CA 93117
(Address
of principal executive offices, Zip Code)
(424)
202-6944
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant (1) filed all reports required to be
filed
by Section 13 or 15(d) of the Exchange Act 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
o
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.
Large
accelerated filer o
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Accelerated
filer
o
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Non-accelerated
filer
o
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Smaller
reporting company x
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o No x
The
number of shares of registrant’s common stock outstanding, as of July 31, 2008
was 143,430,050.
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Page
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PART
I - FINANCIAL INFORMATION
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Item
1. Financial Statements
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2
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Item
2. Management’s Discussion and Analysis or
Plan of Operation
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8
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Item
3. Quantitative and Qualitative Disclosures
About Market Risk
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12
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Item
4. Controls and Procedures
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12
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PART
II - OTHER INFORMATION
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Item
1. Legal Proceedings
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13
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Item
2. Unregistered Sales of Equity Securities
and Use of Proceeds
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13
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Item
3. Defaults Upon Senior
Securities
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13
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Item
4. Submission of Matters to a Vote of
Security Holders
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13
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Item
5. Other Information
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13
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Item
6. Exhibits
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13
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SIGNATURES
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14
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1
Item
1.
Financial
Statements.
ORIGINOIL,
INC.
(A
Development Stage Company)
BALANCE
SHEETS
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(Unaudited)
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|||||
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June
30,
2008
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December
31,
2007
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ASSETS
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|||||
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CURRENT
ASSETS
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Cash
and cash equivalents
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$
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739,043
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$
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1,267,670
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Prepaid
expense
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10,000
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-
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|||||
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Total
Current Assets
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749,043
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1,267,670
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PROPERTY
& EQUIPMENT, at cost
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Machinery
and equipment
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1,373
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-
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Furniture
and fixtures
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2,821
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-
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Computer
equipment
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2,584
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-
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6,778
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-
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Less
accumulated depreciation
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(568
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)
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-
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6,210
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-
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OTHER
ASSETS
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Patent
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3,561
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3,561
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Trademark
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4,467
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4,467
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Security
deposit
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9,650
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650
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Total
Other Assets
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17,678
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8,678
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TOTAL
ASSETS
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$
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772,931
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$
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1,276,348
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LIABILITIES
AND SHAREHOLDERS' EQUITY
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CURRENT
LIABILITIES
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Accrued
expenses
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$
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4,181
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14,762
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Credit
card payable
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869
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159
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Other
payable
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2,887
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-
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Payroll
taxes payable
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9,926
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15,120
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TOTAL
LIABILITIES
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17,863
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30,041
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SHAREHOLDERS'
EQUITY
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Preferred
stock, $0.0001 par value; 50,000 authorized preferred shares
Common stock,
$0.0001 par value; 500,000,000 authorized common shares 143,430,050
shares
issued and outstanding, respectively
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14,343
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14,343
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Additional
paid in capital
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1,678,055
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1,678,055
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Deficit
accumulated during the development stage
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(937,330
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)
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(446,091
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)
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TOTAL
SHAREHOLDERS' EQUITY
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755,068
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1,246,307
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TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
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$
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772,931
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$
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1,276,348
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The
accompanying notes are an integral part of these financial
statements
2
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
(Unaudited)
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From
Inception
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Three
Months
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Six
Months
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June
1, 2007
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Ended
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Period
Ended
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Ended
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through
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June
30, 2008
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June
30, 2007
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June
30, 2008
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June
30, 2008
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REVENUE
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$
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-
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$
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-
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$
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-
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$
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-
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OPERATING
EXPENSES
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General
and administrative expenses
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228,997
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53,181
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396,127
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842,022
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Research
& development
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73,361
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-
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111,784
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123,215
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Depreciation
& amortization expense
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51
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-
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568
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568
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TOTAL
OPERATING EXPENSES
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302,409
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53,181
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508,479
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965,805
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LOSS
FROM OPERATIONS BEFORE OTHER INCOME
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(302,409
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)
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(53,181
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(508,479
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(965,805
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OTHER
INCOME
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Interest
income
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99
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3
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1,837
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11,535
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Dividend
income
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5,889
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-
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13,420
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15,225
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Capital
gains
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-
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-
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-
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107
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Tax
exempt interest
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-
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-
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1,983
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1,983
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Interest
expense
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-
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-
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-
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(375
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)
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TOTAL
OTHER INCOME/(EXPENSE)
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5,988
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3
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17,240
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28,475
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NET
LOSS
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$
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(296,421
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)
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$
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(53,178
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)
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$
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(491,239
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)
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$
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(937,330
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)
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BASIC
AND DILUTED LOSS PER SHARE
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$
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(0.00
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)
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$
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(0.00)
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$
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(0.00
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)
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WEIGHTED-AVERAGE
COMMON SHARES OUTSTANDING
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BASIC
AND DILUTED
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143,430,050
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-
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143,430,050
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The
accompanying notes are an integral part of these financial
statements
3
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENT
OF SHAREHOLDERS' EQUITY
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Deficit
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Accumulated
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Additional
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during
the
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Common
stock
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Paid-in
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Development
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Shares
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Amount
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Capital
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Stage
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Total
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Balance
at December 31, 2007
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143,430,050
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$
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14,343
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$
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1,678,055
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$
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(446,091
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)
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$
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1,246,307
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Net
Loss for the period ended June 30, 2008 (unaudited)
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(491,239
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)
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(491,239
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)
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Balance
at June 30, 2008 (unaudited)
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143,430,050
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$
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14,343
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$
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1,678,055
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$
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(937,330
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)
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$
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755,068
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The
accompanying notes are an integral part of these financial
statements
4
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
(Unaudited)
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From
Inception
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|||||||
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Six
Months
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June
1, 2007
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|||||||
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Ended
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Period
Ended
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through
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|||||||
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June
30, 2008
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June
30, 2007
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June
30, 2008
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|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
loss
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$
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(491,239
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)
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$
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(53,178
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)
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$
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(937,330
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)
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Adjustment
to reconcile net loss to net cash used in operating
activities
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||||||||||
Depreciation
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568
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-
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568
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Contributed
capital by investor
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-
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-
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375
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Common
stock issued for services
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-
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-
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5,000
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|||||||
(Increase)
Decrease in:
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||||||||||
Prepaid
expenses
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(10,000
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)
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(15,000
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)
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(10,000
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)
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Deposits
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(9,000
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)
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(650
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)
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(9,650
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)
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Advances
to Officers
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-
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(2,750
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)
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-
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||||||
Other
assets
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-
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-
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(8,028
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)
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||||||
Increase
(Decrease) in:
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||||||||||
Accounts
payable
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-
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11,612
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-
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|||||||
Accrued
expenses
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(10,581
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)
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-
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4,181
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||||||
Credit
card payable
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710
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278
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869
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|||||||
Payroll
taxes payable
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(5,194
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)
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13,489
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9,926
|
||||||
Other
liabilities
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2,887
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-
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2,887
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|||||||
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||||||||||
NET
CASH USED IN OPERATING ACTIVITIES
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(521,849
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)
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(46,199
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)
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(941,202
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)
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CASH
FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||||
Purchase
of equipment
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(6,778
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)
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-
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(6,778
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)
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|||||
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||||||||||
NET
CASH USED BY INVESTING ACTIVITIES
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(6,778
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)
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-
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(6,778
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)
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CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
Proceeds
from loan payable
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-
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75,000
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-
|
|||||||
Proceeds
from investors to purchase common stock
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-
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22,563
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-
|
|||||||
Proceeds
from stock issuance
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-
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-
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1,687,023
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|||||||
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||||||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
-
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97,563
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1,687,023
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|||||||
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||||||||||
NET
INCREASE IN CASH
|
(528,627
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)
|
51,364
|
739,043
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||||||
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||||||||||
CASH,
BEGINNING OF PERIOD
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1,267,670
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-
|
-
|
|||||||
|
||||||||||
CASH,
END OF PERIOD
|
$
|
739,043
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$
|
51,364
|
$
|
739,043
|
||||
|
||||||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||||
Interest
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
Taxes
paid
|
$
|
-
|
$
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-
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$
|
-
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The
accompanying notes are an integral part of these financial
statements
5
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS-UNAUDITED
JUNE
30,
2008
1.
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BASIS
OF PRESENTATION
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The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-Q
and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all normal
recurring adjustments considered necessary for a fair presentation have been
included. Operating results for the six month period ended June 30, 2008
are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2008. For further information refer to the financial statements
and
footnotes thereto included in the Company's Form 10-K for the year ended
December 31, 2007.
Going
Concern
The
accompanying financial statements have been prepared on a going concern basis
of
accounting, which contemplates continuity of operations, realization of assets
and liabilities and commitments in the normal course of business. The
accompanying financial statements do not reflect any adjustments that might
result if the Company is unable to continue as a going concern. The Company
does
not generate significant revenue, and has negative cash flows from operations,
which raise substantial doubt about the Company’s ability to continue as a going
concern. The ability of the Company to continue as a going concern and
appropriateness of using the going concern basis is dependent upon, among
other
things, additional cash infusion. The Company has obtained funds from its
shareholders since its’ inception, and believes this funding will continue, and
is also actively seeking new investors. Management believes the existing
shareholders and the prospective new investors will provide the additional
cash
needed to meet the Company’s obligations as they become due, and will allow the
development of its core of business.
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
This
summary of significant accounting policies of Carbon Sciences, Inc. is presented
to assist in understanding the Company’s financial statements. The financial
statements and notes are representations of the Company’s management, which is
responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States
of
America and have been consistently applied in the preparation of the financial
statements.
Development
Stage Activities and Operations
The
Company is in its initial stages of formation and has insignificant revenues.
FASB #7 defines a development stage activity as one in which all efforts
are
devoted substantially to establishing a new business and even if planned
principal operations have commenced, revenues are insignificant.
Revenue
Recognition
The
Company will recognize revenue when services are performed, and at the time
of
shipment of products, provided that evidence of an arrangement exists, title
and
risk of loss have passed to the customer, fees are fixed or determinable,
and
collection of the related receivable is reasonably assured. To date, the
Company
has had no revenues and is in the development stage.
Cash
and Cash Equivalent
The
Company considers all highly liquid investments with an original maturity
of
three months or less to be cash equivalents.
6
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS-UNAUDITED
JUNE
30,
2008
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Loss
per Share Calculations
The
Company adopted Statement of Financial Standards (“SFAS”) No. 128 for the
calculation of “Loss per Share”. SFAS No. 128 dictates the calculation of basic
earnings per share and diluted earnings per share. Basic earnings per share
are
computed by dividing income available to common shareholders by the
weighted-average number of common shares available. Diluted earnings per
share
is computed similar to basic earnings per share except that the denominator
is
increased to include the number of additional common shares that would have
been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. The Company’s diluted loss per share is the same as
the basic loss per share for the period ended June 30, 2008 as the inclusion
of
any potential shares would have had an anti-dilutive effect due to the Company
generating a loss.
3.
|
CAPITAL
STOCK
|
During
the six months ended June 30, 2008, the Company issued no shares of common
stock.
4.
|
INCOME
TAXES
|
|
The
Company files income tax returns in the U.S. Federal jurisdiction,
and the
state of California. With few exceptions, the Company is no longer
subject
to U.S. federal, state and local, or non-U.S. income tax examinations
by
tax authorities for years before
2006.
|
|
The
Company adopted the provisions of FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes, on January 1, 2007. Deferred income
taxes
have been provided by temporary differences between the carrying
amounts
of assets and liabilities for financial reporting purposes and
the amounts
used for tax purposes. To the extent allowed by GAAP, we provide
valuation
allowances against the deferred tax assets for amounts when the
realization is uncertain.
|
|
Included
in the balance at June 30, 2008, are no tax positions for which
the
ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility. Because of
the impact
of deferred tax accounting, other than interest and penalties,
the
disallowance of the shorter deductibility period would not affect
the
annual effective tax rate but would accelerate the payment of cash
to the
taxing authority to an earlier
period.
|
|
The
Company's policy is to recognize interest accrued related to unrecognized
tax benefits in interest expense and penalties in operating
expenses.
|
7
Item
2.
Management’s
Discussion and Analysis or Plan of Operation.
This
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. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "potential" or "continue," the negative
of
such terms, or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially from those in
the
forward-looking statements as a result of various important factors. Although
we
believe that the expectations reflected in the forward-looking statements are
reasonable, such should not be regarded as a representation by OriginOil,
Inc.,
or any other person, that such forward-looking statements will be achieved.
The
business and operations of OriginOil, Inc. and its subsidiaries are subject
to
substantial risks, which increase the uncertainty inherent in the
forward-looking statements contained in this Report.
The
following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere in
this
Report.
Overview
The
Company is currently developing a technology to produce a bio-fuel from algae
through a cost-effective, high-speed manufacturing process to replace petroleum
in various applications such as diesel, gasoline, jet fuel, plastics and
solvents. Algae, unlike other bio-fuel feedstock such as corn and sugarcane,
does not destroy vital farmlands and rainforests, disrupt global food supplies
and create new environmental problems.
The
Company’s business model is based on licensing this technology to customers such
as fuel refiners, chemical and oil companies. The Company is not in the business
of producing and marketing oil or fuel, based on algae, as an end
product.
A
host of
factors, including rising oil prices, global warming, and the rapid
industrialization of China and India, have greatly increased the demand for
a
renewable alternative to petroleum. With new technology, algae can be grown
economically to replace petroleum.
There
are
three primary challenges in cultivating algae for oil:
·
|
Algae
growth is dependent on a calm fluid environment; it does not like
agitation. One of the primary challenges is how to optimally introduce
carbon dioxide (CO2) and nutrients needed by the growing algae
culture
without disrupting or over-aerating
it.
|
·
|
Algae
requires light as a source of energy to fuel its growth and oil
production
facilities. Algae cultivation systems need to distribute light
cost-effectively and evenly within the algae
culture.
|
·
|
Algae
organisms are protected by a tough cell wall. That wall must be
cracked —
normally an energy-expensive process — to extract the oil. The challenge
is to maximize oil yield by cracking as many of the algae cells
as
possible with the smallest amount of energy.
|
To
meet
these challenges, the Company is developing a portfolio of proprietary
technologies, including Quantum Fracturing™ and the Helix BioReactor™.
Quantum
Fracturing
Quantum
Fracturing, the Company’s patent-pending technology, based on the science of
mass transfer and fluid fracturing, addresses, and overcomes, all three
challenges above. It works at the microscopic level to unlock many biological
and chemical properties that massively enhance the efficiency of algae
production and oil extraction.
8
In
Quantum Fracturing, water, carbon dioxide and other nutrients are fractured
at
very high pressure to create a slurry of micron-sized bubbles, which is then
injected into the algae culture awaiting it in a lower-pressure growth vessel,
the bioreactor. This process can theoretically achieve total and instantaneous
distribution of nutrients to every algae cell in the culture without fluid
disruption or aeration. The pressure differentials between the two zones
substantially increase contact and exchange between the micronized nutrients
and
the algae cells.
Helix
BioReactor
The
heart
of the Company’s system is the Helix BioReactor, an advanced algae growth system
that can grow multiple layers of algae biomass around-the-clock with daily
harvest. In a natural pond, the sun only illuminates one layer of algae growth,
down to about half an inch below the surface. In contrast, the Helix Bioreactor
features a rotating vertical shaft with very low energy lights arranged in
a
helix or spiral pattern, which results in a theoretically unlimited number
of
layers. Additionally, each lighting element is engineered to produce specific
light waves and frequencies for optimal algae growth.
The
helix
structure also serves as the BioReactor’s nutrient delivery system, through
which the Quantum Fractured nutrients, including CO2, is evenly delivered
to the
entire algae culture, monitored and tuned for optimum growth.
Solvent-Free
Extraction Process
Algae
walls, which encase the oil, are resilient and difficult to break down, and
the
process of cracking algae cells to release the oil, known as lysing, has
long
represented a big challenge for the algae-to-oil industry. Mechanical methods
to
do so are energy-intensive and often ineffective; commonly-used chemical
solvents such as benzene, ether or hexane are toxic and require careful
handling. Such practices increase operating costs and make it harder to site
algae production systems.
The
Company has developed a new algae oil extraction process that does not use
chemical solvents. Algae biomass is first sent through a shielded wave guide
system where it receives low-wattage, frequency-tuned microwave bursts that
break the cell walls. Quantum Fracturing is then applied to the now pre-cracked
cells to complete the oil extraction with ease. This unique approach makes
low-energy and environmentally-safe algae oil production a reality.
Modular
and Scalable System
To
reach
the production levels necessary to realistically replace petroleum as an
energy
source, an algae growth system must be fully scalable. The Company’s system to
enhance and optimize algae growth allows both horizontal and vertical “stacking”
of many Helix BioReactors into an integrated network of fully automated,
portable, and remotely monitored growth units.
Further,
by the use of such modular design, a large number of Helix BioReactors can
be
connected to a small number of extraction units to achieve both economies
of
scale and full industrialization of algae production.
The
Company’s business model is based on licensing this technology to customers such
as fuel refiners, chemical and oil companies. The technologies we will use
to
transform algae into a new form of oil, however, have never been utilized
on a
commercial basis.
9
Critical
Accounting Policies
The
Securities and Exchange Commission ("SEC") defines "critical accounting
policies" as those that require application of management's most difficult,
subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain and may change
in
subsequent periods. Not all of the accounting policies require management
to
make difficult, subjective or complex judgments or estimates. However, the
following policies could be deemed to be critical within the SEC
definition.
Revenue
Recognition
The
Company will recognize revenue when services are performed, and at the time
of
shipment of products, provided that evidence of an arrangement exists, title
and
risk of loss have passed to the customer, fees are fixed or determinable,
and
collection of the related receivable is reasonably assured. To date, the
Company
has had no revenues and is in the development stage.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the amounts reported in the accompanying financial statements.
Significant estimates made in preparing these financial statements include
the
estimate of useful lives of property and equipment, the deferred tax valuation
allowance, and the fair value of stock options. Actual results could differ
from
those estimates.
Fair
Value of Financial Instruments
SFAS
No.
107, “Disclosures About Fair Value of Financial Instruments”, requires
disclosure of the fair value information, whether or not recognized in the
balance sheet, where it is practicable to estimate that value. As
of December 31, 2007, the amounts reported for cash, accounts receivable,
accounts payable, accrued interest and other expenses, and notes payable
approximate the fair value because of their short maturities.
Recently
Issued Accounting Pronouncements
In
December 2004, the Financial Accounting Standards Board issued two FASB Staff
Positions - FSP FAS 109-1, Application of FASB Statement 109 "Accounting
for
Income Taxes" to the Tax Deduction on Qualified Production Activities Provided
by the American Jobs Creation Act of 2004, and FSP FAS 109-2 Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision within
the
American Jobs Creation Act of 2004. Neither of these affected the Company
as it
does not participate in the related activities.
In
May
2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error
Corrections.” This new standard replaces APB Opinion No. 20, “Accounting
Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim
Financial Statements,” and represents another step in the FASB’s goal to
converge its standards with those issued by the IASB. Among other changes,
Statement 154 requires that a voluntary change in accounting principle be
applied retrospectively with all prior period financial statements presented
on
the new accounting principle, unless it is impracticable to do so. Statement
154
also provides that (1) a change in method of depreciating or amortizing a
long-lived non-financial asset be accounted for as a change in estimate
(prospectively) that was effected by a change in accounting principle, and
(2)
correction of errors in previously issued financial statements should be
termed
a “restatement.” The new standard is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005.
Early adoption of this standard is permitted for accounting changes and
correction of errors made in fiscal years beginning after June 1, 2005. The
Company has evaluated the impact of the adoption of Statement 154 and does
not
believe the impact will be significant to the Company's overall results of
operations or financial position
10
As
of
December 31, 2007, the Company adopted Financial Accounting Standards No.
123
(revised 2004), “Share-Based Payment” (FAS) No. 123R, that addresses the
accounting for share-based payment transactions in which an enterprise receives
employee services in exchange for either equity instruments of the enterprise
or
liabilities that are based on the fair value of the enterprise’s equity
instruments or that may be settled by the issuance of such equity instruments.
The statement eliminates the ability to account for share-based compensation
transactions, as we formerly did, using the intrinsic value method as prescribed
by Accounting Principles Board, or APB, Opinion No. 25, “Accounting for Stock
Issued to Employees,” and generally requires that such transactions be accounted
for using a fair-value-based method and recognized as expenses in our statement
of income. The
adoption of (FAS) No. 123R by the Company had no material impact on the
statement of income.
Results
of Operations
Revenues
Currently
the Company is in its development stage and has no revenues for the three
months
and six months ended June 30, 2008. We were incorporated in the State of
Nevada
on June 1, 2007.
General
and Administrative Expenses
General
and administrative (“G&A”) expenses for the three months and six months
ended June 30, 2008 were $228,997 and $396,127, respectively. The G&A
expenses consist primarily of salaries and professional fees.
Research
and Development Cost
Research
and development (“R&D”) cost for the three months and six months ended June
30, 2008 were $73,361 and $111,784, respectively. The R&D costs consist
primarily of testing and research of product development.
Net
Loss
Our
net
loss for the three months and six months ended June 30, 2008 was $296,421
and
$491,239 respectively. This is due to continuing operations of the company,
technology development, and the costs associated with registering the company
for its public offering.
Liquidity
and Capital Resources
As
of
June 30, 2008, we had $731,180 of working capital as compared to $1,237,629
from
inception (June 1, 2007) through December 31, 2007. This decrease in working
capital was due primarily to ongoing costs of developing the company and
preparing its technologies for market.
Net
cash
used in operating activities was $521,849 for the six months ended June 30,
2008, as compared to $419,353 from inception (June 1, 2007) through December
31,
2007. The Company is in the development stage and has generated no revenues.
Net
cash
used in investing activities was $6,778 for the six months ended June 30,
2008,
as compared to $0 from inception (June 1, 2007) through December 31, 2007.
The
Company purchased small equipment.
11
Net
cash
flows provided from financing activities was $0 for the six months ended
June
30, 2008, as compared to $1,687,023 from inception (June 1, 2007) through
December 31, 2007. There was no equity financing, or loans from
shareholders.
We
require substantial working capital to fund our business. We cannot predict
whether additional financing will be available to us on favorable terms when
required, or at all. Since our inception, we have experienced negative cash
flow
from operations and expect to experience significant negative cash flow from
operations in the future.
We
plan
on raising additional capital through the sale of additional common stock.
Our
common stock is quoted on the Over the Counter Bulletin Board under the symbol
“OOIL”.
Off-Balance
Sheet Arrangements
We
do not
have any off balance sheet arrangements that are reasonably likely to have
a
current or future effect on our financial condition, revenues, and results
of
operations, liquidity or capital expenditures.
Item
3. Quantitative
and Qualitative Disclosures About Market Risk.
N/A.
Item
4T.
Controls
and Procedures.
Evaluation
of Disclosure Controls and Procedures.
Under
the supervision and with the participation of our management, including our
President, Chief Executive Officer and Chief Financial Officer, we evaluated
the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered
by this report. Based upon that evaluation, our President, Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls
and
procedures as of the end of the period covered by this report were effective
such that the information required to be disclosed by us in reports filed
under
the Securities Exchange Act of 1934 is (i) recorded, processed, summarized
and
reported within the time periods specified in the SEC's rules and forms and
(ii)
accumulated and communicated to our management to allow timely decisions
regarding disclosure. A controls system cannot provide absolute assurance,
however, that the objectives of the controls system are met, and no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within a company have been detected.
Changes
in Internal Control Over Financial Reporting.
During
the most recent quarter ended June 30, 2008, there has been no change in
our
internal control over financial reporting (as defined in Rule 13a-15(f) and
15d-15(f) under the Exchange Act) ) that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
12
Item
1.
Legal
Proceedings.
We
are
not a party to any pending legal proceeding, nor is our property the subject
of
a pending legal proceeding, that is not in the ordinary course of business
or
otherwise material to the financial condition of our business. None of our
directors, officers or affiliates is involved in a proceeding adverse to
our
business or has a material interest adverse to our business.
Not
Applicable.
Item
2.
Unregistered
Sales of Equity Securities and Use of Proceeds.
Item
3.
Defaults
Upon Senior Securities.
Not
applicable.
Item
4.
Submission
of Matters to a Vote of Security Holders.
Not
applicable.
Not
applicable.
Item
6.
Exhibits.
Title
of Document
|
Location
|
|
3.1
|
Articles
of Incorporation
|
(1)
|
|
|
|
3.3
|
By-laws
|
(2)
|
|
|
|
10.1
|
Form
of Subscription Agreement, dated July 11, 2007
|
(2)
|
|
|
|
10.2
|
Form
of Subscription Agreement, dated August 2007
|
(2)
|
|
|
|
10.3
|
Form
of Subscription Agreement, dated November 2007
|
(3)
|
|
|
|
31.1
|
Certification
by Chief Executive Officer and Chief Financial Officer, required
by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act.
|
Attached
|
|
|
|
32.1
|
Certification
by Chief Executive Officer and Chief Financial Officer, required
by Rule
13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350
of
Chapter 63 of Title 18 of the United States Code.
|
Attached
|
(1)
|
Incorporated
by reference to the Company’s Registration Statement on Form SB-2 filed
with the Securities and Exchange Commission on March 24,
2008
|
(2)
|
Incorporated
by reference to the Company’s Registration Statement on Form SB-2 filed
with the Securities and Exchange Commission on December 11,
2007.
|
(3)
|
Incorporated
by reference to the Company’s Registration Statement on Form SB-2/A filed
with the Securities and Exchange Commission on February 5,
2008.
|
13
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused
this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ORIGINOIL,
INC.
|
By:
|
/s/
T Riggs Eckelberry
|
|
|
T
Riggs Eckelberry
Chief
Executive Officer (Principal Executive Officer)
and
Acting Chief Financial Officer (Principal Accounting and Financial
Officer)
August
14, 2008
|
|
14