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SVLT > SEC Filings for SVLT > Form 10-Q on 14-Nov-2013All Recent SEC Filings

Show all filings for SUNVAULT ENERGY, INC.

Form 10-Q for SUNVAULT ENERGY, INC.


14-Nov-2013

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Conditions of Operations.

General Overview

Sunvault Energy, Inc. (the "Company," "we," "us," "our," and "SunVault")'s mission is to bring cost effective generation and energy storage to the solar industry through a seamless and simultaneous integration of energy generation and storage at the molecular level. We believe this technical approach has the potential to enable one of the lowest overall system cost structures while operating at maximum efficiency as a result of fewer electronic components and integration into a vertical mass-produced appliance. SunVault's objective is to then facilitate global energy sales through a Distributed Utility business model built upon and around the company's All-in-One™, PolyCell™ and Vertical Solar Appliance technology platforms. All of our technology is still in the early developmental stage and will require licensing agreements with other third party entities so as to augment their technology and patent it into the Company's intellectual property. We expect this licensing strategy will be used to further develop and build upon these third party technologies in order to execute the Company's business plan and facilitate increased speed-to-market of our products. Our new corporate website is www.sunvaultenergy.com; this website is not incorporated into this filing.

The Company's current business strategy is as follows:

1. Purchase revenue generating renewable assets that align with the corporate mission so as to lessen the Company's dependency on external funding sources while simultaneously serving as an existing socket in which to plug proprietary SunVault products into once our products come to fruition and become commercially viable;

2. Align with two leading technical universities to develop the Appliance and All-in-One™ platforms, described below;

3. Acquire supporting/augmenting licensing agreements with third parties required to fully develop the PolyCell manufacturing platform;

4. Bundle subsequent SunVault-owned technology platforms combined with third party Licensing Agreements and seek to align with a governmental entity capable of bringing cutting-edge laboratory access, technical minds and the ability to procure on a mass-scale once the product becomes available.

5. Once the technology platforms are production ready, align with a for-profit global energy brand that brings manufacturing, distribution and a complimentary energy product portfolio and generate revenue via a royalty licensing model.

SunVault is a development stage company founded in part by John Crawford, a former Energizer Battery employee. SunVault is bringing cost-effective energy generation and energy storage to the solar and electricity industries. SunVault views the global energy dilemma as a system problem, involving all aspects of the way electricity is produced, consumed and managed. Three platform technologies underpin SunVault: 1) PolyCell™ batteries for energy storage, 2) All-in-One™, a new energy generation/storage chemistry and 3) a vertical solar appliance. These platforms and a commercialization strategy have been crafted in an attempt to redefine all aspects contributing to the total cost of electricity.

PolyCell™ is a fundamentally new, proprietary, patent pending method for assembling a multi-celled battery. The PolyCell™ technical mindset is built upon technology currently in production operating at TRL level 9 but slated for mobile applications such as electric vehicles, scooters, etc. These current products, not produced by the Company, are intended for small scale storage, <5kWh per unit. SunVault anticipates building upon this working knowledge so as to develop advanced processes to manufacture large, 50kWh, 120V batteries having the potential to be the lowest cost stationary batteries on the market at $100/kWh. This cost compares to $300-350/kWh for the nearest alternatives such as lead-acid and molten salt batteries. The cycle life of large scale PolyCell™ storage batteries is anticipated to deliver electricity at grid parity cost upon market entry. SunVault currently needs funding to execute its plan to develop additive manufacturing techniques and production scale-up.

All-in-One™ is primarily a photovoltaic (PV), electrochemical cell invented for the purposes of generating and storing energy at the molecular level. It is not a solar panel or a battery. It is a new chemistry that combines the functions of each into one seamless and potentially disruptive, low cost energy solution. One can think of this technology as a solar panel that stores its own energy and provides power when the sun goes down. The concept has been experimentally verified, demonstrated by video via the company's website with a current TRL of
3. This technology anticipates eliminating the cost and complexity of power conversion when charging batteries with PV by building this functionality into the chemistry of the photoactive material. Research suggests power conversion costs account for ? to ˝ of the system cost.


PolyCell™ and All-In-One™ chemistry enable SunVault's ultimate vision of a three-dimensional solar appliance. Energy cost and installation complexity are significantly reduced with this appliance by integrating energy generation and storage into one unit which eliminates the boots-on-the-roof and other custom engineering associated with conventional solar installations. The appliance is envisioned to be installed in a matter of hours as opposed to days. Multiple appliances could be theoretically aggregated and controlled remotely by entities tasked with integrating 100% renewable energy production portfolio. A vertical appliance, perhaps similar in size to a water heater, will produce 2-20 times the energy in an equivalent footprint compared to conventional solar. This performance suggestion has been verified experimentally by research developed at the Massachusetts Institute of Technology. Initially, we expect that conventional PV materials will be integrated with PolyCell™ to commercialize this technology. Ultimately, the All-in-One™ chemistry is expected to be the low cost solution for this appliance approach but this will take time to develop, refine and acquire necessary agency approvals. Appliances can be scaled for both residential and industrial use and can be aggregated in such a manner as to enable 100% clean renewable energy independent of whether the sun shines or the wind blows.

Our Business and Patent Pending Technology

Our platform technology is comprised of four patents-pending applications that are anticipated to be combined with future rights to other patented and patent pending technologies.

Our Intellectual Property

Our four pending patent applications are in the early development stage, requiring licensing agreements with third parties upon which to further develop their technologies to facilitate and execute our business plan:

· SVLT patent application #1 US 61/834,394

This provisional patent application is related to coatings and films which improve the aesthetics of existing solar panels without impeding their efficiency. While the potential technology has use in existing, typical solar installations, the primary purpose for its development is to enable aesthetics and performance targets for the vertical photovoltaic energy generation/storage appliance.

· SVLT patent application #2 US 61/834,396

This provisional patent application is related to a vertical appliance which generates and stores energy from the sun. Its value proposition is the potential to provide electrical energy at grid parity pricing even when the sun is not shining. The reason for the vertical aspect is that it provides more power per area illuminated. Going vertical also eliminates solar panels on the roof of a structure and decreases associated installation time and cost. When the energy storage is integrated and these appliances are grid tied, they enable a distributed aggregation business model. Such a model allows remote access for utility companies to defer capital expenditures by using these appliances for peak shaving and load shifting as opposed to gas-fired peaker turbines or similar carbon-emitting generation

· SVLT patent application #3 US 61/834,399

This provisional patent application covers the PolyCell™ battery design and installation strategy. The PolyCell™ battery design is enabled by a manufacturing method which will potentially produce cost effective electrical energy storage for renewables. PolyCell™ is also an enabler for the vertical appliance, as it is anticipated to be the lowest-cost method in which to store the majority of the energy in that system.

· SVLT patent application #4 US 61/831,580

This provisional patent application covers all of the technology in the broad technology roadmap.

In regard to the All-in-One™ technology, the Company had intentions to enter into technology license agreement with the University of British Columbia pertaining to a unique organic chlorophyll-based simultaneous energy generation and storage technology. After significant investment in time and research, the Company now believes that we have superseded this organic bio-based solar technology with an alternative technology which we now refer to as "All-In-One". The licensing rights, previously negotiated and consummated with Millennium Trends International Inc., or Millennium, will be transferred back to Millennium due to Company concerns regarding performance and lifetime constraints. We do not anticipate exercising the licensing rights to the technology from the University of British Columbia, instead focusing our efforts on this new and improved "All-In-One" technology. This new technology is in its nascent stage and our patent applications are expected to be filed before the end of 2013. Nevertheless, the Company's proprietary All-in-One™ technology meets many of the current performance requirements to power remote sensors and other low-drain devices. We are also currently in negotiations for the synergistic and supporting licensing rights to this technology, which are expected to be executed before the end of 2013.


Pending Trademark Applications:

· SunVault corporate name (US Application 85857326) - Application date June 8, 2013

Future Business Operating Segments

The Company, upon receiving the necessary financing to execute its business plan, anticipates establishing three Global Business Units operating under the SunVault Energy umbrella, namely;

1. SunVault Energy Materials

2. SunVault Energy Storage Systems

3. SunVault Energy Appliances

All three future business operating units will be managed and measured against their own profit and loss and have been designed so as to provide technical competency, support and service to the other two business units. Staffing and resourcing each business unit is anticipated to take a methodical approach and will be a function of our expected upcoming signed agreements dictating the priority of execution.

SunVault Energy Materials has been tasked to commercialize the Company's flagship technology frequently referred to as All-in-One™; an active material that stores and creates energy simultaneously at the molecular level in a multi-phase format. This technical approach has the potential and is expected to enable a lower system cost at maximum efficiency. As noted above, the Company anticipates entering into a license agreement with a third party to further develop this technology.

The technology is believed to be immediately applicable to the global remote sensor/display/medical device market. Research suggests the energy supply component of this market is estimated to be approximately $500 million in Europe alone. The Company's revenue model, based on the time the Company receives the necessary financing to start its research and development activities, is expected to be derived as a function of supplying its flagship active material to leading system integrators in these three designated fields of use. Our All-in-One™ patent-pending energy material is analogous to battery manufacturers supplying the power component to a device integrator (ie. flashlights, cellphones, etc). Our All-in-One™ technology can be thought of as a solar panel and a battery, wrapped up into one potentially low-cost unit.

The All-in-One technology is expected to continue to be optimized and immediately grow the Company's ability to supply the remote sensor market and potentially begin penetration into the lucrative personal electronic device market (ie. cellphones, tablets, portable LED lighting). While these initial target markets are critical for the SunVault business, the ultimate destination for our All-in-One™ technology is global electrical utility, industrial, commercial and residential applications.

All-in-One's performance, as demonstrated via video on the Company's website, has an operating voltage of 0.4 volts with an energy storage capacity of 100 milli-joules per square centimeter.

The Company believes that the All-in-One™ energy material can be integrated into every form of AC and DC electrical power use. For clarity, the All-in-One™ technology is neither a solar panel nor a battery. It is an active energy material that when subjected to sunlight generates and stores energy simultaneously at the molecular level. This energy material has the potential to make obsolete the traditional solar panel on the roof, racking, wiring, connections, labor, batteries in the basement, charge controllers, etc. It is with this thought basis that the Company expects it can present a new alternative to renewable energy. We expect, after obtaining the required amount of financing to advance this technology, to have this All-in-One™ energy material commercially viable in small power applications in approximately 24 months to 36 months. We are currently working to determine the amount of financing needed to develop this technology.


SunVault Energy Storage Systems plans to deliver large scale energy storage (battery) solutions so as to facilitate energy arbitrage and integrate renewables such as solar farms in the Alberta, Canada market. We expect to use the electricity markets in Alberta Canada as our market entry point in early to mid-2014.

Current renewables integration is fraught with issues stemming from the fact that the sun doesn't always shine and the wind doesn't always blow thereby forcing electrical utilities to invest in auxiliary power generation equipment so as to make up the difference during periods lacking in sun and wind availability.

The Company has strategically added Governor William (Bill) Richardson, former Secretary of Energy and Mr. Allen Crowley to the board of directors so as to try to strengthen management relationships and business competency in unregulated global markets where the business case for energy arbitrage (buy low, sell high) is immediately attractive.

We anticipate all Alberta arbitrage projects in the future will incorporate SunVault's patent-pending PolyCell™ and All-in-One™ technologies in addition to best-in-class components that are accessible in the market today. We expect, after completing and obtaining the required amount of financing to advance this technology, to have PolyCell™ commercially viable in 24 months to 36 months. We are currently working to determine the amount of financing needed to develop this technology. The Alberta market is a natural entry point due to geographic proximity, although markets in Germany and Asia are beginning to emerge in to the global spotlight due to the recent establishment of significant government financial support programs.

SunVault Energy Appliances has been created so as to eliminate the "boots-on-the-roof" currently associated with conventional solar installations via the Company's patent-pending vertical integration techniques. Research suggests that approximately 40% of the cost of conventional solar roof installations are related to this continually escalating labor component. With photovoltaic active material dropping at a continuous pace, the Company anticipates its patent-pending vertical 3D appliance approach to attract market attention. Collaboration and further optimization is anticipated with a leading university on the topic, depending on the amount and timing of our future financing, sometime in 2013 or 2014 so as to optimize the integration approach. The appliance model is anticipated to enable the installation and trenching to the electrical meter set in a matter of hours as compared to multiple days with conventional solar installations. We expect, after obtaining the required amount of financing to advance this technology, to have this Energy Appliance commercially viable in 24 months to 36 months. We are currently working to determine the amount of financing needed to develop this technology.

Acquisition of Intellectual Property

On May 8, 2013, pursuant to a securities purchase agreement, Millennium and its affiliated corporate entities acquired 80 million shares (4 million shares prior to the 20 to 1 forward stock split) of the Company's common stock and became the majority shareholder. Following consummation of the transaction, Millennium and its affiliated entities held 78.74% of the voting securities of the Company. The transaction resulted in a change in control of the Company from the former Shareholder to Millennium and its related Entities. On this date, the Company also received a 50 percent interest in certain intellectual property ("Joint IP") that was transferred to the Company from Millennium for total consideration of $1. This transfer was accounted for as a transfer of intellectual property between entities under common control and there was no historical cost basis in this intellectual property for Millennium, therefore no gain or loss was recognized.

On August 6, 2013, Company assigned all of its rights, interests and its share in this Joint IP back to Millennium for a 100 percent interest in the intellectual property the Company now owns, mentioned above. The Company has let its rights to certain intellectual property acquired in this transfer to expire. See Note 3 to our Financial Statements included in this Quarterly Report on Form 10-Q for further information on how these intellectual property rights were acquired by the Company.

Discontinued Operations - Prior Business

We previously sold new organic clothing and other eco-friendly products for infants and toddlers from our inception date (December 8, 2010) to May 8, 2013. We have discontinued this former business upon the change in control to pursue our new business plan and all the Company's prior business operations for selling organic clothing and other eco-friendly products for infants and toddlers are shown on the accompanying financial statements as discontinued operations.


Results of Operations for the three months ended September 30, 2013 and September 30, 2012

Continuing Operations - three months ended September 30, 2013:

For the three months ended September 30, 2013, the Company incurred net loss of approximately $177,000 which mainly comprised of research and development of approximately $19,000, payroll expenses of approximately $96,000, advertising and promotion expenses of approximately $16,000, professional fees of approximately $14,000, and other operating expenses of approximately $32,000.

Discontinued Operations - three months ended September 30, 2013 and 2012:

Our net loss from Discontinued Operations for the three months ended September 30, 2013 was approximately $4,000. For the three months ended September 30, 2012, the Company had incurred a net loss from discontinued operations during that same period of approximately $31,000. The decrease in net loss from discontinued operations was primarily due to a decrease in professional fees and other general and administrative costs. This decrease in net loss in 2013 was due to our decrease in selling, general and administrative expenses.

Results of Operations for the nine months ended September 30, 2013 and September 30, 2012

Continuing Operations:

For the nine months ended September 30, 2013, the Company incurred net loss of approximately $323,000 which mainly comprised of research and development expenses of approximately $42,000, payroll expenses of $152,000, patent pending legal expenses of approximately $27,000, corporate promotion of $17,000, marketing expenses of approximately $32,000 and professional fees and other operating expenses of $53,000.

Discontinued Operations:

For the nine months ended September 30, 2013 and September 30, 2012, the Company had incurred a net loss from discontinued operations of approximately $22,000 and $62,000, respectively. The decrease in loss is due to the decrease in selling, general and administrative expenses.

Results of Operations from the period December 8, 2010 (inception date) to September 30, 2013

Continuing Operations:

For the period December 8, 2010 (inception date) to September 30, 2013, the Company incurred net loss of approximately $323,000 which mainly comprised of research and development expenses of approximately $42,000, payroll expenses of $152,000, patent pending legal expenses of approximately $27,000, corporate promotion of $17,000, marketing expenses of approximately $32,000 and professional fees and other operating expenses of $53,000.

Discontinued Operations:

For the period December 8, 2010 (inception date) to September 30, 2013, the Company has generated a net loss of $87,000.

Our selling, general and administrative expenses consisted of charges for marketing consulting services, professional fees incurred for being a public company, website maintenance, credit card fees, bank charges, office maintenance, communication expenses, courier, postage, office supplies, and travel.


Liquidity and Capital Resources

As of September 30, 2013, we had $139 of cash, total assets of approximately
$139 and negative working capital of approximately $207,000 compared to $14,230
in cash, approximately $21,000 in total assets and approximately $17,000 in
working capital as of December 31, 2012.

The following table provides detailed information about our net cash flow for
all financial statement periods presented in this Report:

Cash Flow - Continuing Operations

                                                                                                 December 8,
                                                                                                     2010
                                                                                                 (inception)
                                                                                                   through
                                                                                                  September
                                                         Nine Months Ended September 30,             30,
                                                           2013                   2012               2013

Net cash (used in) operating activities              $       (130,670)       $      (50,975)     $  (197,539)
Net cash (used in) investing activities              $               -       $             -     $    (5,000)
Net cash provided by financing activities            $         116,579       $        58,095     $    202,678
Net cash inflow (outflow)                            $        (14,091)       $         7,120     $        139

Operating Activities - Continuing Operations

Cash used in operating activities from continuing operations for the nine months ended September 30, 2013 was $115,861, which consisted of a net loss of $323,177 as well as the effect of decrease in our working capital in $207,316. The decrease in working capital was due to an increase in due to a related company of $147,072 and an increase in our accrued expenses of $60,244. See Note 7 to our Financial Statements included in this Quarterly Report on Form 10-Q for further information on the loan to this related company.

Operating Activities - Discontinued Operations

Cash used in operating activities from discontinued operations in the nine months ended September 30, 2013 consisted of net loss adjusted for non-cash expense items such as amortization, as well as the effect of changes in working capital. Cash used in operating activities from discontinued operations in the nine months ended September 30, 2013 was $14,809, which consisted of a net loss of $21,586, adjustments for non-cash expense items totaling $750 of amortization, a valuation allowance for slow moving inventory of $2,837 and cash provided by working capital of $3,190. The cash provided by working capital was due to the decrease in inventory of $5,674. This amount was offset by cash used in working capital which consisted of decrease in accrued liabilities of $2,484 for payment of professional fees.

Cash used in operating activities from discontinued operations in the nine months ended September 30, 2012 consisted of net loss adjusted for non-cash expense items such as amortization, as well as the effect of changes in working capital. Cash used in operating activities from discontinued operations in the nine months ended September 30, 2012 was $50,975, which consisted of a net loss of $61,543, adjustments for non-cash expense items totaling $750 of amortization and cash provided by working capital of $9,818. The cash provided by working capital was due to the decrease in consigned inventory of $38,085. This amount was offset by cash used in working capital which consisted of an increase in accounts receivable of $8,647, decrease in accrued liabilities of $1,152 for payment of professional fees and a decrease in deferred revenue of $18,468 due to the increase in inventory sales.

Cash used in operating activities from discontinued operations from December 8, 2010 (inception) to September 30, 2013 consisted of net loss adjusted for non-cash expense items such as amortization, as well as the effect of changes in working capital. Cumulative cash used in operating activities was $197,539, which consisted of a net loss of $323,177, adjustments for decreases in working capital items totaling $207,316 and changes in working capital from discontinued operations of $81,678.


Investing Activities

During the nine months ended September 30, 2013 and 2012, we had no investing activities and for the period from December 8, 2010 (inception) to September 30, 2013, total cash used in our investing activities of $5,000. This decrease in 2012 was due to an increase in our website development costs of $5,000 in 2011.

Financing Activities

During the nine months ended September 30, 2013, we had net cash provided by financing activities of $116,579. This cash was provided by proceeds from the sale of our common stock in our private placement. See Note 8 to our Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding the sale of our common stock for net proceeds of $116,000.

During the nine months ended September 30, 2012, we had net cash provided by financing activities of $58,095. The Company sold its common shares in a private placement dated March 1, 2012 and sold during this period 21,600,000 (restated for forward stock split of 20 for 1) common shares in this private placement of our common stock with total proceeds of $54,000. We have net cash provided by financing activities of $202,678 for the period December 8, 2010 (inception) to September 30, 2013.

Liquidity and Capital Resources Available to Us

. . .

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