Evolucia Inc. - FORM 10-Q - May 15, 2013

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EX-32.1 - EXHIBIT 32.1 - Evolucia Inc.ex321.htm
EX-32.2 - EXHIBIT 32.2 - Evolucia Inc.ex322.htm
EX-31.1 - EXHIBIT 31.1 - Evolucia Inc.ex311.htm
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EXCEL - IDEA: XBRL DOCUMENT - Evolucia Inc.Financial_Report.xls
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________to _______________.

Commission File Number 000-53590 
 
EVOLUCIA INC.
(Exact name of small business issuer as specified in its charter)
 
Nevada 
  
98-0550703
(State or other jurisdiction of incorporation or organization) 
  
(I.R.S. Employer Identification No.)

 6151 Lake Osprey Drive, Third Floor. Sarasota, FL 34240
(Address of principal executive offices)

941-751-6800
(Issuer’s telephone number)

(Former name, former address and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x   No 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o   
Accelerated filer o
Smaller reporting company x
  
Non-accelerated filer  o (Do not check if a smaller reporting company)  
    

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 the Registrant’s Common Stock outstanding as of May 14, 2013 was 1,206,402,967.
 
 
 
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The Company’s unaudited financial statements for the three months ended March 31, 2013 and for comparable periods in the prior year are included below. The financial statements should be read in conjunction with the notes to financial statements that follow.
 
Evolucia, Inc.
   
   
March 31,
    
December 31,
  
   
2013
    
2012
  
ASSETS
  
(Unaudited)
        
             
Current assets:
            
  Cash and cash equivalents
  
$
580,612
    
$
1,642,464
  
  Accounts receivable
    
93,411
      
112,982
  
  Inventory
    
1,321,190
      
1,280,072
  
  Prepaid expenses and other current assets
    
367,140
      
59,598
  
      Total current assets
    
2,362,353
      
3,095,116
  
                 
Property and equipment, at cost, net of
                
  accumulated depreciation of $684,836 and $641,491
    
129,300
      
113,584
  
                 
Other assets:
                
Deposits and other assets
    
13,033
      
190,607
  
                 
   
$
2,504,686
    
$
3,399,307
  
                 
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
              
                 
Current liabilities:
                
  Accounts payable and accruals
  
$
1,169,542
    
$
1,404,752
  
  Lines of credit – affiliates
    
2,212,376
      
83,067
  
  Deferred revenue
    
1,000,000
      
1,000,000
  
  Current portion of debt
    
75,000
      
292,642
  
      Total current liabilities
    
4,456,918
      
2,780,461
  
                 
Long-term debt
    
1,338,553
      
2,821,326
  
                 
Commitments and contingencies
                
                 
Stockholders' equity (deficit):
                
 Common stock, $0.001 par value,
                
  1,500,000,000 shares authorized,
                
  1,199,974,396 and 1,197,771,827
                
  shares issued and outstanding
    
1,199,976
      
1,197,771
  
 Additional paid-in capital
    
88,091,796
      
87,054,357
  
 Accumulated (deficit)
    
(92,548,082
)
    
(90,420,133
)
     
(3,256,310
)
    
(2,168,005
)
Less: Treasury stock, at cost, 313,400 shares
    
(34,475
)
    
(34,475
)
     
(3,290,785
)
    
(2,202,480
)
   
$
2,504,686
    
$
3,399,307
  
                 
 
See the accompanying notes to the consolidated financial statements.
 
 
Evolucia, Inc.
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
 
   
Three Months
  
   
2013
    
2012
  
             
Sales
  
$
$456,821
    
$
611,228
  
                 
Cost of sales
    
293,885
      
389,391
  
Gross profit
    
162,936
      
221,837
  
                 
 General and administrative -
                
   Selling, general and administrative expenses
    
1,426,522
      
713,945
  
     
1,426,522
      
713,945
  
                 
Loss from operations
    
(1,263,586
)
    
(492,108
)
                 
Other Income (expense):
                
 Interest and debt conversion expense, net
    
(864,363
 )    
(252,488)
  
                 
                 
Loss before income taxes
    
(2,127,949
)
    
(744,596
)
Income taxes
    
-
      
-
  
Net loss
   $
(2,127,949
)
  
$
(744,596
)
                 
Per share information basic and diluted:
                
Loss per share
   $ 
(0.00
)
  
$
(0.00
)
Weighted average shares outstanding
    
 1,199,661,325
      
885,682,715
  
                 
 
See the accompanying notes to the consolidated financial statements.
 
 
 
Evolucia, Inc.
Statements of Cash Flows
For the three Months Ended March 31, 2013 and 2012
(Unaudited)
 
   
   
2013
    
2012
  
Cash flows from operating activities:
            
  Net cash (used in) operating activities
   $ (1,224,467 )   $ (166,813 )
                 
Cash flows from investing activities:
                
   Acquisition of property and equipment
     (59,061 )     -  
  Net cash (used in) investing activities
     (59,061 )     -  
                 
Cash flows from financing activities:
                
   Common Shares issued or subscribed for cash
     -       1,604,600  
  Loan from affiliate
     100,000       -  
  Proceeds from lines of credit, net
     121,656       -  
   Proceeds from notes payable and convertible debentures
     -       50,000  
   Repayments of notes payable
     -       (8,719 )
  Net cash provided by financing activities
     221,656       1,64 5,881  
                 
Increase (decrease) in cash and cash equivalents
     (1,061,872 )     1,479,068  
Cash and cash equivalents, beginning
     1,642,484       235,878  
Cash and cash equivalents, ending
   $ 580,612     $ 1,714,946  
                 
Cash paid for interest      $ 34,407     $ 19,488  
Cash paid for income taxes   
   $ 0     $ 0  
                                                                                                                                
 
See the accompanying notes to the consolidated financial statements.
 

EVOLUCIA, INC.
MARCH 31, 2013
(UNAUDITED)

 
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Organization, Nature, and Continuance of Operations
 
Evolucia Inc. (“the “Company”) (formerly Sunovia Energy Technologies, Inc.) is a Nevada corporation engaged in the business of providing energy-efficient and sustainable energy solutions primarily through the design, manufacture and sale of light emitting diode (LED) lighting solutions for outdoor and area lighting. The Company designs, manufactures and sells environmentally responsible, energy-efficient lighting products based on the latest and most efficient LED technologies and its own patented Aimed Optics™ technology, which improves efficiency and energy savings by aiming light where it is needed most, providing for safe and more effective outdoor and area lighting while eliminating wasted light. In the past, the Company also engaged in research and development in solar energy and infrared technologies; however, the Company is no longer engaged in those activities.
 
Basis of presentation
 
The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All material inter-company accounts, transactions and profits have been eliminated.   In the opinion of management, these consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of the results for and as of the periods shown.  The accompanying consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles.  However, certain information or footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations for such periods are not necessarily indicative of the results expected for 2013 or for any future period. These financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.
 
Continuance of Operations
 
Our consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Although we have incurred losses from operations and have a significant accumulated deficit at March 31, 2013, we believe we have adequate resources, such as cash on-hand, our credit facilities, and the proceeds from a private placement during the second quarter of 2013 to meet our operating commitments through December 31, 2013. Furthermore, we expect to have positive cash flows from operations in 2013. In the event these resources and operating cash flows are not sufficient to fully fund our operating commitments or our growth, we would look to secure additional debt or equity financing. There can be no guarantee that we will be successful securing funding. In the event we are unable to fund our operations by positive operating cash flows or additional funding, we may be forced to reduce our expenses and slow down our growth rate. Accordingly, our consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
 
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 reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period.  Actual results could differ from those estimates. The Company’s significant estimates include the valuation of stock based charges, the receivable allowance and the inventory reserve.
 
Share-Based Payments
 
ASC 718, Stock Compensation requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the grant date fair value of the award.
 

 
We record the grant date fair value of stock-based compensation awards as an expense over the vesting period of the related stock options.  In order to determine the fair value of the stock options on the date of grant, we use the Black-Scholes option-pricing model.  Inherent in this model are assumptions related to expected stock-price volatility, option life, risk-free interest rate and dividend yield.  Although the risk-free interest rates and dividend yield are less subjective assumptions, typically based on factual data derived from public sources, the expected stock-price volatility, forfeiture rate and option life assumptions require a greater level of judgment which make them critical accounting estimates.
 
 We use an expected stock-price volatility assumption that is based on historical volatilities of our common stock and we estimate the forfeiture rate and option life based on historical data related to prior option grants.
 
Inventory
 
Inventory consists principally of electronic components used in the assembly of LED lights. Inventory is stated at the lower of cost of market on a first in first out basis.
 
Loss Per Share
 
Loss per share is computed using the basic and diluted calculations on the statement of operations.  Basic income (loss) per share is calculated by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding for the period.  Weighted average number of shares has been adjusted for stock splits and reverse stock splits.  Diluted income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock equivalents, using the treasury stock method. During periods in which a loss is incurred common stock equivalents are not considered in the computation as their effect would be anti-dilutive. he total number of share equivalents not included in the calculation at March 31, 2013, consisted of approximately 321,127,000 options of which approximately 190,393,000 are vested.
 
Reclassifications
 
Certain amounts for the period ended March 31, 2012, have been reclassified in the comparative financial statements to be comparable to the presentation for the period ended March 31, 2013. These reclassifications had no effect on net loss as previously reported.
 
NOTE B - STOCKHOLDERS' EQUITY
 
Common Stock
 
During the first quarter the Company issued 2,203,569 shares of its common stock for services. These shares were valued at the trading price of the Company’s common stock on the date the issuances were agreed to or $50,842.
 
NOTE C – COMMITMENTS, CONCENTRATIONS AND CONTINGENCIES
 
Manufacturing, development and investment agreement
 
On July 12, 2012, the Company entered into a manufacturing, development and investment agreement with Leader Electronics, Inc. (“LEI”).
 
Pursuant to the agreement - LEI will (i) collaborate in the next generation design of the Products, (ii) design and implement LEI power supplies into the Products as provided in the Specifications, (iii) invest One Million Dollars (US $1,000,000) into the Company, (iv) lease for the Company’s use equipment representing a value of Two Million Dollars (US $2,000,000) which will include manufacturing, test and product equipment and tooling mentioned below to be more specifically identified by the parties, (v) manufacture the Products (A) at a 10% discount to the market rate against non-cancellable purchase orders from the Company for one year following the initial purchase orders and thereafter at a 5% discount to the market rate until a full Eight Million Dollars ($8,000,000) in discounts have been earned by the Company and (B) provide working capital to manufacturing all Products with net payment terms of 45 days, (vi) LEI will acquire all needed tooling, and (vii) serve as an exclusive distributor for the Asia Territory.
 
 
In addition, the Company will (i) appoint LEI as the exclusive manufacturer for the Products sold in the Asia Territory, (ii) appoint LEI as an exclusive distributor for the Asia Territory and (iii) provide non-cancellable and irrevocable stand-by Letter of Credit for beneficiary of LEI prior to the shipment of Product or provide payment for the Product prior to shipment.
 
LEI will purchase Twelve Million Five Hundred (12,500,000) shares of common stock (the “Shares”) of the Company for an aggregate purchase price of One Million Dollars  (US $1,000,000)  within two (2) business days of the Effective Date.  In the event the Company does not place orders for the Products within five (5) years from the Effective Date (the “Order Date”), then LEI shall be entitled to sell to the Company the lesser of (i) Shares it has not resold as of the Order Date or (ii) the portion of Shares representing the amount of Products that the Company has not ordered.  For example, in the event the Company has placed orders for 80% of the Products, then LEI will be entitled to sell back to the Company as of the Order Date the lesser of the number of Shares that have not been resold by LEI or 20% of the Shares. The per share price will be $0.08. LEI invested the $1,000,000 on July 20, 2012 and this investment has been classified as a liability in the Company’s financial statements because of the contingency related to the share repurchase agreement.
 
Other Litigation
 
 The Company is defending a lawsuit brought by a supplier of a component part of its LED lighting fixtures. The suit alleges that the Company owes a re-stocking fee in excess of $100,000 for the return of certain parts. The Company believes it has substantial defenses to this suit and intends to vigorously defend it. The lawsuit is in the early stages of pleadings, and the outcome is uncertain. No significant legal fees have been incurred in this case to date.
 
 Concentrations
 
During the three months ended March 31, 2013 and 2012, the Company sold LED lighting products aggregating approximately 63% of revenue to 1 customer and 58% of revenue to 3 customers, respectively, which sales individually represented in excess of 10% of the Company’s net revenues.
 
 NOTE D – STOCK OPTIONS
 
On May 1, 2008, the Company adopted the 2008 Incentive Stock Plan and April 25, 2013, the Company adopted the 2013 Incentive Stock Plan. (“the “Plans”) designed to retain directors, employees, executives and consultants and reward them for making major contributions to the success of the Company. The following is a summary of the Plans and does not purport to be a complete description of all of its provisions.
 
 The Plans are administered by the board of directors. The plans did not have any individual caps other than the limitation of granting incentive stock options to employees and the exercise of more than $100,000 in fair market value of stock per year. The plans permit the grant of restricted stock and non-statutory options to participants where appropriate. The maximum number of shares issuable under the Plans is 125,000,000 and 50,000,000. The Plans shall terminate ten years from the date adopted. The board of directors may, as permitted by law, modify the terms of any grants under the Plans, and also amend, suspend, or extend the Plan itself. In addition, options may be issued outside of the plan by the Company.
 
During the period ended March 31, 2013, the Company granted stock options for 114,250,000 shares to affiliates or employees of the Company. The options have exercise prices of $.025 to $.03 per share and vest immediately for 113,250,000 options which were granted pursuant to lines of credit and over a 4 year period for 1,000,000 options which were granted for services. The options have a term of 5 years.
 
The options are valued using the Black-Scholes option pricing model with the following assumptions.
 
Term 5 years, Volatility 120%, Discount rate 1% and dividend yield 0%.
 
The options had a fair value of $2,819,000 which is being amortized over the term of the lines of credit of 1 year for the 113,250,000 financing options and the vesting period of the other 1,000,000 options.
 
During the three months ended March 31, 2013, an aggregate of $989,000 was charged to operations related to options granted during the current year and prior years. Of this amount $704,000 was charged to interest expense and $285,000 was charged to selling, general and administrative expense.
 
 
At March 31, 2013, there was an aggregate of approximately $4,193,000 of unrecognized charges related to stock options which vest in future periods.
 
A summary of stock options outstanding, including options granted outside of the Plan is as follows:
 
 
   
Shares
  
Options outstanding at
      
beginning of year
    
206,876, 660
  
Options granted
    
114,250,000
  
Outstanding at March 31, 2013
    
321,126,660
  
Exercisable at March 31, 2013
    
190,393,327
  
 
NOTE E – CONVERTIBLE DEBENTURES
 
On June 10, 2011, the Company completed an offering of 9% Convertible Secured Promissory Notes (the “Notes”) in the aggregate principal amount of $1,000,000 to 10 existing shareholders. The Notes bear interest at an annual rate of 9%. Interest on the Notes is accrued and payable on the earlier of conversion to common stock or the maturity date of the 9% Notes. The Notes are secured by a lien on all of the assets of the Company. The Notes mature on July 1, 2012 and may be prepaid at any time without penalty upon ten days’ notice to the holders of the Notes.
 
The Convertible Notes are convertible on or after September 1, 2011 at a conversion price of $.06, which is 150% of the market value of the Company’s common stock, determined based upon the closing price of the Company’s common stock for the 20-day period beginning May 31, 2011 and ending June 20, 2011. The Company may require conversion of the Notes if the market value of the Company’s common stock exceeds 200% of the conversion price over a 20-day trading period, provided that a minimum trading volume of 50,000 shares per day exists during that time period.
 
During March and April 2012 holders of an aggregate of $900,000 in principal of the 9% convertible notes described above have restructured their Convertible Notes by extending the maturity date to July 1, 2013. In connection with that extension, each of these holders converted 50% of the principal amount of the Convertible Notes to common stock at $.02 per share which was the trading price of the shares on the conversion date, and the Company modified the terms of the remaining debt to allow conversion at $.02 per share and to increase the interest rate to 10% per annum. The aggregate principal amount outstanding under the new notes is $550,000. The Company issued an aggregate of 45,000,000 shares of common stock to the holders of the Convertible Notes for the conversion of principal to common stock. In connection with the modification and conversion the Company recorded a debt conversion expense of $300,000.
 
During April 2013 the holders of $300,000 of the outstanding balance of the notes agreed to roll-over their principal and accrued interest of $80,237 into the Private Placement Memorandum described below in Note G. The holders of the remaining $250,000 extended the due date to April 2014. The interest rate was increased to 11% for the notes extended to April 2014.
 
NOTE F – NOTES PAYABLE
 
Notes Payable
 
From December 2009 through July 2010 the Company borrowed an aggregate of $828,968 from certain shareholders. The borrowings are evidenced by notes which bear interest at 10% per annum and are due between 12 months and 24 months from the date of issuance. Through December 31, 2012, $265,415 was repaid bring the balance due to $563,553.
 
During March 2012 the holders of the outstanding notes agreed to extend the due date on these notes to July 1, 2013, and during April 2013 holders of an aggregate of $488,553 agreed to extend the due date to April 2014. In conjunction with the 2013 extensions the interest rate was increased to 11%.
 
 
Lines of Credit
 
A private investor, shareholder and director of the Company has made available to the Company a working capital and purchase order line of credit (Line of Credit) of $2.0 million, which is due during January 2014, and which may be increased at the investor’s discretion. The Line of Credit may be drawn to purchase components for orders (Purchase Orders) of the Company’s products approved by the investor and that are used to fulfill specific customer orders. For advances made for the purpose of funding Purchase Orders, the line is secured to the extent of the specific customer accounts receivables that are related to the Purchase Order upon which the advance was made. Advances made against Purchase Orders bear interest at an annual rate of 12.5% and the principal amount of the draws, plus accrued interest, must be repaid back to the Line of Credit within three business days of receipt of payment from the customer.  Because interest is added back to the Line of Credit, the available balance increases by that amount. The lender has deposited the $2,000,000 in a bank account and the Company has recorded the entire Line of Credit as a liability. On February 22, 2013, effective as of December 31, 2012, the investor made the entire Line of Credit available without restriction to the Company to use for both Working Capital purposes and for Purchase Orders. For that portion of the Line of Credit that is used for Working Capital purposes, the Line of Credit is unsecured, and bears interest at an annual rate of 14.0%. At March 31, 2013, $1,553,968 was drawn on the bank account for working capital. The balance of the line was $2,043,517 including unpaid interest of $43,517.
 
A private investor, shareholder and director of the Company made available to the Company a purchase order line of credit (Line of Credit) of $250,000, which may be increased at the investor’s discretion and, with the exception of $100,000 which is due in January, 2014, is due on demand. The Line of Credit may be drawn to purchase components for orders (Purchase Orders) of the Company’s products approved by the investor.  The Line of Credit bears interest at an annual rate of 12.5% and draws must be repaid within three business days of receipt of payment from the customer. The Line of Credit is secured to the extent of the specific customer accounts receivables that are related to the Purchase Order upon which the advance was made. Advances made against Purchase Orders at March 31, 2013, were $168,859.
 
 NOTE G – SUBSEQUENT EVENTS
 
Private Placement Memorandum (PPM)
 
On November 27, 2012, the Company initiated the sale of up to $5,000,000 in 14% Callable Promissory Notes (Notes) in a confidential private placement memorandum (PPM) offering made pursuant to Regulation D to accredited investors only. The Notes are secured by the assets of the company, subject to the security interests of the Callable Promissory Notes and Purchase Order Lines of Credit described above.
 
The Notes are offered in units of $50,000 each (a “Unit”). The PPM is subject to a minimum sale of 40 Units ($2,000,000) and a maximum of 100 Units. The Notes mature in 36 months. Interest accrues for the first 12 months and is payable monthly starting in month 13. Principal plus accrued interest is paid in month 36. Each Unit receives a Common Stock Purchase Warrant to purchase 2,395,542 shares of common stock at an exercise price of $0.025. Through April 15, 2013 the Company sold 40 units of its current PPM for aggregate proceeds of $2,000,000. The notes are secured by the assets of the company. The Company closed on the sale of those units on April 22, 2013.
 
On March 20, 2013, the Company entered into a joint venture with Sunovia Energy Technologies Europe Sp. z o.o. (SETE), a Polish corporation which is unaffiliated with the Company. The agreement calls for the payment of $11 million to Evolucia by August 31, 2013 in exchange for the manufacture and distribution rights to the European markets.  Under the joint venture agreement, a new entity called Evolucia Europe Sp. z o.o. will be created, with Evolucia Inc. holding a 51% ownership share and SETE holding the remaining 49% ownership.  The joint venture agreement provides exclusive manufacturing rights to Evolucia Europe for the European markets. There is no assurance that the joint venture will be completed.
 
On May 6, 2013, the Company entered into a settlement agreement and general release with its former Chief Executive Officer. The agreement calls for the Company to deliver a Promissory Note in the amount of $328,849. The Note will bear interest at 9.0% per annum and will be due on May 14, 2014.
 
Additionally, the Company will be required to issue to its former Chief Executive Officer a second Promissory Note in the amount of $30,687. The Note will bear interest at 9.0% per annum and will be due on May 14, 2014. In the event the Company raises capital in the amount of $3 million or more, then the note shall become immediately due and payable.
 
The Company was expected to close its settlement with the former Chief Executive Officer on May 14, 2013.
 
Subsequent to March 31, 2013, the Company issued 6,428,571 shares of common stock for services.
 
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
The following information should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this report. Statements made in this Item 2, "Management's Discussion and Analysis or Plan of Operation," and elsewhere in this 10-Q that do not consist of historical facts, are "forward-looking statements." Statements accompanied or qualified by, or containing words such as "may," "will," "should," "believes," "expects," "intends," "plans," "projects," "estimates," "predicts," "potential," "outlook," "forecast," "anticipates," "presume," and "assume" constitute forward-looking statements, and as such, are not a guarantee of future performance. The statements involve factors, risks and uncertainties, the impact or occurrence of which can cause actual results to differ materially from the expected results described in such statements. Risks and uncertainties can include, among others, fluctuations in general business cycles and changing economic conditions; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company's products, as well as other factors, many or all of which may be beyond the Company's control. Consequently, investors should not place undue reliance upon forward-looking statements as predictive of future results. The Company disclaims any obligation to update the forward-looking statements in this report.

You should read the following information in conjunction with our financial statements and related notes contained elsewhere in this report. You should consider the risks and difficulties frequently encountered by early-stage companies, particularly those engaged in new and rapidly evolving markets and technologies. Our limited operating history provides only a limited historical basis to assess the impact that critical accounting policies may have on our business and our financial performance.

We encourage you to review our periodic reports filed with the SEC and included in the SEC’s Edgar database, including the annual report on Form 10-K filed for the year ended December 31, 2012. The Company is focusing solely on building its LED lighting business at this time, while attempting to preserve the value of both its patented solar substrate technology and its shared solar technology for possible commercialization in the future.

Evolucia Inc. (“Evolucia”, the “Company”, “we”, “our”, “us”) is an LED lighting company that markets LED lighting products. The Company’s sole focus is on the design, engineering, development, patent protection, manufacturing, marketing, sales and support of LED (light emitting diode) lighting fixtures, controls and components.  LEDs are semiconductor devices that emit light when electric currents are passed through them. LED’s have many advantages over traditional light sources including longer lifetime, lower energy consumption, smaller size and greater design flexibility. The Company’s LED light sources are designed to enhance lighting performance, reduce energy consumption, eliminate the use of hazardous materials and lower maintenance costs.

LED Lighting
 
LED lights are the most energy-efficient lighting source on the market today. Through our patented Aimed LED Lighting™ technology, we have demonstrated that less overall light is needed if the light is correctly focused on the target area. Our LED lighting product’s are currently focused on (i) the roadway / walkway lighting market (“cobra head,” “shoebox”, “post-top” and “bell-top” products) (ii) the area lighting market (utility lights, wall packs, canopy lights and parking garage lights) and (iii), commercial indoor market (“high-bay”, “troffer”, and “flat panel” products). A report issued in January 2011 by Navigant Consulting, Inc. prepared for the Building Technologies Program of the Office of Energy Efficiency and Renewable Energy (EERE) of the Department of Energy estimates that there are 56.2 million roadway lights in the United States, including 26.5 million street lights and 26.1 million highway lights. The same report estimates approximately36.4 million parking garage lights and 15.8 million parking lot light fixtures installed in the United States. It is estimated that fewer than 5% of the parking light totals and fewer than 1% of the roadway and highway lights utilized LED technology. We believe these markets, which are primary markets for the Company’s products, have the potential for significant growth in LED replacements of existing technologies in the years ahead. We believe traditional lighting companies have been somewhat slow to develop LED technologies; however, the large lighting companies have acquired the technology either through acquisition or OEM and licensing arrangements with smaller LED lighting companies. There are currently over 200 competitors in the outdoor LED lighting market. Our Aimed Optics™ technology potentially provides a competitive advantage in this market, as it uses less energy to put more light on the ground, although high product costs have hampered sales of the cobrahead and shoebox products in certain markets.

We believe we have proven that our proprietary Evolucia Aimed Optics™ LED lighting system is the most efficient method to deliver light to a target area.  By mounting LEDs at numerous complementary angles within a single LED fixture, we believe we have achieved performance metrics that are superior to competing products in crucial aspects of LED lighting: energy conservation and photometry (light delivered to a target area).  Our proprietary lighting system has received an award for the Best Outdoor Street Light, in its class, from the United States Department of Energy (DOE), one of the most highly regarded recognitions within the lighting industry.

In addition to superior efficiency, we believe our products are beating the competition in the performance metric of Fitted Target Efficacy (FTE) which is a standard the U.S. Department of Energy (DOE) has proposed for ENERGY STAR™ to evaluate how effectively a luminaire delivers light to the target area that it was designed to illuminate. We believe our patent pending Evolucia Aimed Optics™ technology consistently outperforms our competitors, which is supported by our receipt of the 2010 Next Generation Luminaries™ Solid State Lighting Design Award for our outdoor street and area cobra-head product, selected by judging representatives from the lighting industry, International Association of Lighting Designers, the Illuminating Engineering Society and the Department of Energy from more than 350 applicants. This award serves as a recommendation to the lighting specifier community. In addition, our cobra head and shoebox fixtures have been certified by the Design Lights Consortium (DLC). We expect that the certification from the DLC will open up additional opportunities for us, as customers and suppliers receive incentives from state and utility energy programs for purchasing products that are certified by the DLC.

 
Evolucia’s Aimed Optics™ LED technology consistently outperforms LED “light bar” technology on FTE tests, as shown in the chart below:
 
Company
Roadway Type
FTE Required*
Actual FTE
AEL
Type II
37
29
Beta LED
Type II
37
40
General Electric
Type II
37
42
Evolucia
Type II
37
56

*DOE evaluated hundreds of High Intensity Discharge (HID) fixtures to establish ENERGY STAR™ minimum FTE requirements. Minimum FTEs for LED luminaries were established to achieve at least 20% energy savings compared to top performing HID products.

The three most significant challenges facing the Company in the LED lighting market are (a) developing a recognizable brand name, (b) expanding our distribution network, and (c) driving down the cost of manufacturing and selling our products. Each of these issues is a priority for the Company at this time and going forward. In addition, as the LED lighting market continues to expand, the distribution efficiencies of the lighting market are likely to drive industry consolidation and product portfolio expansion as fixture companies compete for business across product lines.
  
Results of Operations for the Quarter ended March 31, 2013

For the three months ended March 31, 2013, the Company had a net loss of ($2,127,949), as compared to a net loss ($744,596) for the three months ended March 31, 2012, or an increase of $1,383,353. The significant factors contributing to this increase are discussed in more detail below.
 
Revenues

Revenues for the three months ended March 31, 2013 were $456,821, as compared to $611,228 for the three-month period ending March 31, 2012, which represented an decrease of $154,407 or approximately 25%. The decrease was the result of sales to fewer customers.
  
Gross Profit

The Company had a gross profit of $162,936, and a gross profit margin of 35.7% for the three months ended March 31, 2013, as compared to a gross profit of $221,837 or a gross profit margin of 36.3% for the three months ended March 31, 2012. The gross margin decreased slightly as a result of a changing product mix.
 
Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $1,426,522 for the three-month period ending March 31, 2013 from $713,945 for the three-month ended March 31, 2012, an increase of $712,577, or 100%. The major components are discussed below.

Compensation & Benefits

Compensation & Benefits expenses were $907,751 for the three months ended March 31, 2013, compared to $222,364 for the three months ended March 31, 2012, an increase of $685,387 or approximately 300%. $335,842 of this increase is related to non-cash expenses associated with stock options awarded to employees. The remaining increase, $349,545 is due to an increase in the number of employees, 14 (24 vs. 10).
 
 
 
General and Administrative

General and administrative expenses are the expenses of operating the business on a daily basis that are not related directly to cost of goods and include travel and entertainment, legal and professional fees, selling and marketing, and occupancy and office expenses. For the three months ended March 31, 2013 the Company incurred aggregate expense of $518,771 in this area, compared to $491,581 for the three months ended March 31, 2012, an increase of $27,190 or 6%. The majority of this increase is related to increases in travel and entertainment, $109,377, occupancy and office, $32,574, sales and marketing, $42,744, and engineering, $14,530, offset by savings in consultants, $98,728, and legal and professional, $82,933.

Other Income and Expenses

Other income and expense reflects interest expense (net of interest income) as discussed below:
 
Total interest expense for the three months ended March 31, 2013 was $864,363 compared to $252,488 for the three months ended March 31, 2012, an increase of $611,875. $471,000 of this increase is attributable to the expense associated with the issuance of warrants during the period of $704,000 compared to $233,000 of debt conversion costs in 2012, while the remaining amount, $140,875, is related to an increase in total company borrowings.  
 
Liquidity and Capital Resources

The Company’s cash flow from operations is insufficient to meet its current obligations. In fiscal year 2012 and through the first quarter of 2013, the Company relied upon additional investment through sales of common stock, lines of credit, and debentures in order to fund its operations.

Cash Flows and Working Capital

To date, we have financed our operations primarily through the sale of equity and debt. As of March 31, 2013, we had $580,612 in cash and cash equivalents. We had receivables, net of allowances, of $93,411 and inventory of $1,321,190. Our current liabilities as of that date were $4,456,503.

Our sales cycle can be several months or longer, with some costs incurred up front, making our business working capital intensive. Also, because we build our products based upon a specific order, it can take up to 90 days to fulfill an order, followed by a period of time in which to collect our receivables.

The Company outsources its manufacturing; consequently, we do not have significant capital equipment expenditures, although tooling costs can reduce our product cost when justified by the level of sales.
 
For the Three Month Period Ended
  
   
March 31, 2013
    
December 31, 2012
  
Cash flows used in Operations
  
$
(1,224,467)
    
$
(166,813)
  
                 
Investing Activities
  
$
(59,061)
    
$
-
  
                 
Financing Activities
  
$
221,656
    
$ 
1,645,881
  
                 
Cash at end of period
  
$
580,612
    
$
1,714,946
  
 
Operating Activities

Net cash used in operating activities for the three months ended March 31, 2013 totaled ($1,224,467) as compared to ($166,813) for the nine months ended March 31, 2012.  During the period ended March 31, 2013, the cash used in operating activities consisted principally of the net loss from operations.

Investing Activities

Net cash used in investing for the three months ended March 31, 2013 was ($59,061) as compared to $0 for the three months ended March 31, 2012. The represents capital expenditures primarily associated with the purchase of the company’s new trade show booth.

Financing Activities

Our net cash provided by financing activities for the three months ended March 31, 2013 was $221,656, which primarily consisted of proceeds from a line of credit and loans.
 
 
Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.
 
Our company has not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under which we have
 
an obligation under a guarantee contract, although we do have obligations under certain sales arrangements including purchase obligations to vendors
a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,
any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or
any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research  and development services with us.

Plan of Operation
 
The Company is continuing to focus its operations on generating sales of LED products through our recently hired team of dedicated sales business development managers, regional sales managers, and our network of manufacturers’ representatives, as well as reducing the cost of producing its LED products in order to make them more price-competitive in the market. In addition, the Company is completing the development of its next generation lighting products and has implemented targeted marketing of its product lines to the global marketplace. We are leveraging several key relationships with energy service companies and original equipment manufacturers to increase sales and to take advantage of price concessions associated with larger orders.

The Company leases office space/warehouse facilities in Sarasota, Florida under an operating lease.  The lease term is for a period of sixty six months and commenced on April 14, 2010.  The base rent over the term is approximately $497,346.  The company is responsible for all taxes, insurance and utility expenses associated with the leased property. 

On October 28, 2012, the Company completely vacated its operations from its former headquarters at 106 Cattlemen Road, Sarasota, FL, 34232 due to the presence of mold. Headquarters office operations were moved temporarily to 6151 Lake Osprey Drive, Sarasota, FL 34240 while the manufacturing division, which also includes its warehouse, was moved temporarily to 6225 21st Street, Bradenton, FL  34203. The current facilities are rented on a month to month basis for approximately $15,622 per month.

The Company was responsible for an aggregate of approximately $280,000 in future rent payments at the time it vacated the above leased property. The Company is negotiating a settlement with the landlord but it cannot be assured that a settlement will be reached and the Company may be liable for the balance of unpaid rent due. No accrual has been recorded for this contingency has been recorded at March 31, 2013.

As of May 14, 2013,  the Company had 24 full-time employees and three active independent contractors. 
 
 
Effect of Changes in Prices

Prices of equivalent incandescent lighting are lower than the price of the Company’s, and its competitors’, LED lighting products. Subsidies and cost-savings achieved over the life of our LED products have supported sales; however, in order to remain competitive, it will be necessary for us to reduce the cost of our products. We have reduced the cost of our products and the sales prices of those products in a meaningful way over the current fiscal year and are continuing to focus efforts in this area.

Critical Accounting Policies and Estimates
 
Critical accounting estimates are those that management deems to be most important to the portrayal of our financial condition and results of operations, and that require management’s most difficult, subjective or complex judgments, due to the need to make estimates about the effects of matters that are inherently uncertain. We have identified our critical accounting estimates which are discussed below.

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 reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. Actual results could differ from those estimates.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to bad debt expense and a credit to an allowance for uncollectible accounts based on its assessment of the current status of individual accounts. Accounts receivable balances that remain outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for uncollectible accounts and a credit to accounts receivable.

Accounting for Derivative Instruments

Derivatives are required to be recorded on the balance sheet at fair value. These derivatives, including embedded derivatives in the Company’s structured borrowings, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.
 
Research and Development

Research and Development ("R&D") expenses are charged to expense when incurred. The Company has consulting arrangements which are typically based upon a fee paid monthly or quarterly. Samples are purchased that are used in testing, and are expensed when purchased. R&D costs also include salaries and related personnel expenses, direct materials, laboratory supplies, equipment expenses and administrative expenses that are allocated to R&D based upon personnel costs.

Revenue Recognition

The Company recognizes revenue when the following conditions have been met: there is persuasive evidence an arrangement exists which includes a fixed price; there is reasonable assurance of collection; the services or products have been provided and delivered to the customer; no additional performance is required and title and risk of loss has passed to the customer. Products may be placed on consignment to a limited number of resellers. Revenue for these consignment transactions will also be recognized as noted above.
 
 
Share-Based Payments
 
Compensation cost relating to share-based payment transactions are recognized in the financial statements. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award).

Recent Accounting Pronouncements
 
The Company does not believe that any recently issued accounting pronouncements will have a material impact on its financial statements.

ITEM 3. QUANTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK
 
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.
 
ITEM 4. CONTROLS AND PROCEDURES.
 
Management Report on Disclosure Controls

Under the supervision and with the participation of management, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period covered by this by this Report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures were not effective due to lack of segregation of duties and the need for an updated accounting system, which is in process.

 Remediation of Material Weaknesses in Internal Control over Financial Reporting

The Company has not established adequate financial reporting monitoring activities to mitigate the risk of management override, specifically because there are few employees and only two officers with management functions there is lack of segregation of duties.   The Company intends to continue to evaluate potentially engaging additional management personnel to alleviate this weakness.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2013, there were no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm 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.

We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results, other than as described below:
 
 
Litigation with Supplier

The Company is defending a lawsuit brought by a supplier of a component part of the Evolucia LED light fixtures. The suit alleges that the Company owes a re-stocking fee for the return of certain inventory. The plaintiff has alleged damages in excess of $100,000. The Company believes it has substantial defenses to this lawsuit and intends to vigorously defend it. The lawsuit is in the early stages of pleadings, and the outcome of this case is uncertain at this time. The Company has incurred no significant legal fees to date in this case.

None of our directors, officers or affiliates are involved in a proceeding adverse to our business or have a material interest adverse to our business.


As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.
 
 
On February 22, 2013 a private investor, shareholder, and director of the Company received a warrant for 107,000,000 shares at a purchase price per share of $0.025 pursuant to the investor making the entire Line of Credit available without restriction to the Company for use as working capital. The Warrant has a term of 5 years.

On February 27, 2013, a private investor, shareholder, and director of the Company received a warrant for 6,250,000 shares at a purchase price per share of $0.025 pursuant to the investor increasing the purchase order Line of Credit to $500,000. The Warrant has a term of 5 years

On March 4, 2013, the Company  granted a stock option on 1,000,000 shares to an employee of the Company. This option has an exercise price of $.025 per share and vests ratably over a four year period. The option has a term of 5 years.
 
On April 22, 2013, the Company entered into Securities Purchase Agreements and Security Agreements with several accredited investors (the “2013 Investors”) providing for the sale by the Company to the 2013 Investors of secured 14% Callable Promissory Notes in the aggregate amount of $2,000,000 (the "2013 Notes").  In addition to the 2013 Notes, the 2013 Investors also received common stock purchase warrants (the “2013 Warrants”) to acquire an aggregate of 95,821,680 shares of common stock of the Company.  In addition, historical investors holding secured notes in the principal amount of $300,000 have elected to convert the principal and interest owed inc connection with their secured notes into the 2013 and related 2013 Warrants resulting in the issuance of additional 2013 Notes in the principal amount of $380,237 and 2013 Warrants to purchase 18,217,482 shares of common stock.  
 
The 2013 Warrants are exercisable for five years at an exercise price of $0.025.  The Warrants are exercisable for a period of five years from the date of issuance at an exercise price of $0.025 per share on a cash basis only, subject to the Company increasing its authorized shares of common stock or implementing a reverse stock split of the outstanding shares of the Company's common stock to provide for the issuance of all shares of common stock upon exercise of all 2013 Warrants issued.  In the event the Company closes a Capital Transaction (as defined below), the Warrant holder may, by notice to the Company (a "Put Notice"), elect to sell to the Company, at the Repurchase Price (as defined below) all or such number of the Warrants held by the holder then outstanding as is specified in the Put Notice. Capital Transaction means any of the following: (i) any sale or other disposition of all or substantially all of the assets of the Company or any of its subsidiaries in any single transaction or series of related transactions; (ii) any transfer or other disposition in any single transaction or series of related transactions of the Company’s common stock representing in excess of 80% of the issued and outstanding shares of common stock or all of its subsidiary’s common stock; (iii) the closing of the Company’s underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of shares of common stock in which not less than $30,000,000 of gross proceeds are received by the Company for the account of the Company; (iv) the liquidation or dissolution of the Company or any of its material subsidiaries; or (v) a merger or consolidation of the Company or any of its material subsidiaries in which the Company or such material subsidiary, as applicable, is not the surviving entity. The Repurchase Price per share means the difference of (i) the quotient of the purchase price paid in connection with the Capital Transaction divided by the number of shares outstanding as of the date of the Capital Transaction plus the number of shares of common stock issuable upon exercise of all Warrants subject to a Put Notice plus all other shares of common stock issuable upon conversion or exercise of other derivative securities as of the date of the Capital Transaction less the (ii) the Purchase Price.
 
The above issuances were made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and/or Rule 506 promulgated under Regulation D there under. The holders of the above securities are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.
 

None
 
 

Not applicable.


Subsequent Events

On April 22, 2013, the Company entered into Securities Purchase Agreements and Security Agreements with several accredited investors (the “2013 Investors”) providing for the sale by the Company to the 2013 Investors of secured 14% Callable Promissory Notes in the aggregate amount of $2,000,000 (the "2013 Notes").  In addition to the 2013 Notes, the 2013 Investors also received common stock purchase warrants (the “2013 Warrants”) to acquire an aggregate of 95,821,680 shares of common stock of the Company. The 2013 Warrants are exercisable for five years at an exercise price of $0.025.  The Company received the proceeds in connection with this financing on April 22, 2013.

The 2013 Notes mature three years from the effective date (the "Maturity Date") and interest associated with the 2013 Notes is 14% per annum, which is payable on the Maturity Date.  The 2013 Notes can be prepaid in whole or in part at any time without the consent of the holder.  Interest must be paid on a monthly basis commencing on the 13th month following the issuance of the 2013 Notes. The 2013 Notes are secured by the assets of the Company.  The 2013 Notes are debt obligations arising other than in the ordinary course of business which constitute direct financial obligations of the Company.

The Warrants are exercisable for a period of five years from the date of issuance at an exercise price of $0.025 per share on a cash basis only, subject to the Company increasing its authorized shares of common stock or implementing a reverse stock split of the outstanding shares of the Company's common stock to provide for the issuance of all shares of common stock upon exercise of all 2013 Warrants issued.  In the event the Company closes a Capital Transaction (as defined below), the Warrant holder may, by notice to the Company (a "Put Notice"), elect to sell to the Company, at the Repurchase Price (as defined below) all or such number of the Warrants held by the holder then outstanding as is specified in the Put Notice. Capital Transaction means any of the following: (i) any sale or other disposition of all or substantially all of the assets of the Company or any of its subsidiaries in any single transaction or series of related transactions; (ii) any transfer or other disposition in any single transaction or series of related transactions of the Company’s common stock representing in excess of 80% of the issued and outstanding shares of common stock or all of its subsidiary’s common stock; (iii) the closing of the Company’s underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of shares of common stock in which not less than $30,000,000 of gross proceeds are received by the Company for the account of the Company; (iv) the liquidation or dissolution of the Company or any of its material subsidiaries; or (v) a merger or consolidation of the Company or any of its material subsidiaries in which the Company or such material subsidiary, as applicable, is not the surviving entity. The Repurchase Price per share means the difference of (i) the quotient of the purchase price paid in connection with the Capital Transaction divided by the number of shares outstanding as of the date of the Capital Transaction plus the number of shares of common stock issuable upon exercise of all Warrants subject to a Put Notice plus all other shares of common stock issuable upon conversion or exercise of other derivative securities as of the date of the Capital Transaction less the (ii) the Purchase Price.

In addition, historical investors holding secured notes in the principal amount of $300,000 have elected to convert the principal and interest owed inc connection with their secured notes into the 2013 and related 2013 Warrants resulting in the issuance of additional 2013 Notes in the principal amount of $380,237 and 2013 Warrants to purchase 18,217,482 shares of common stock.  

The securities were offered and sold to the investors in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 (the “Securities Act”) and/or Rule 506 promulgated under the Securities Act. The investors are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act.
 
On March 20, 2013, the Company entered into a joint venture with Sunovia Energy Technologies Europe Sp. z o.o. (SETE), a Polish corporation which is unaffiliated with the Company. The agreement calls for the payment of $11 million to Evolucia by August 31, 2013 in exchange for the manufacture and distribution rights to the European markets.  Under the joint venture agreement, a new entity called Evolucia Europe Sp. z o.o. will be created, with Evolucia Inc. holding a 51% ownership share and SETE holding the remaining 49% ownership.  The joint venture agreement provides exclusive manufacturing rights to Evolucia Europe for the European markets. There is no assurance that the joint venture will be completed.
 
On May 6, 2013, the Company entered into a settlement agreement and general release with its former Chief Executive Officer. The agreement calls for the Company to deliver a Promissory Note in the amount of $328,849 at closing. The Note will bear interest at 9.0% per annum and will be due on May 14, 2014. The settlement was expected to close May 14, 2013.
 
Additionally, the Company is required to issue a second Promissory Note in the amount of $30,687 to its former Chief Executive Officer. The Note will bear interest at 9.0% per annum and will be due on May 14, 2014. In the event the Company raises capital in the amount of $3 million or more, then the note shall become immediately due and payable.
 

 
 
Exhibit No. 
  
Description of Exhibit
     
3.1
  
Certificate of Change (1)
     
3.2
  
Agreement and Plan of Merger between Acadia Resources, Inc. and Sunovia Solar, Inc.(2)
     
3.3
  
Certificate of Merger between Sun Energy Solar, Inc. and Sunovia Solar, Inc. (2)
     
3.4
  
Certificate of Merger between Acadia Resources, Inc. and Sunovia Energy Technologies, Inc. (2)
     
3.5
  
Articles of Incorporation (3)
     
3.6
  
ByLaws (3)
     
3.7
  
Articles of Merger Pursuant to NRS 92.A.200 (18)
     
4.1
  
Form of Subscription Agreement (4)
     
4.2
  
Nonstatutory Stock Option Agreement between Evolucia Inc. and Charles B. Rockwood (19)
     
4.3   Common Stock Purchase Warrant issued to Thomas Siegfried (20)
     
4.4   Common Stock Purchase Warrant issued to Burton "Skip" Sack (20)
     
4.5   Common Stock Purchase Warrant issued to Burton "Skip" Sack (20)
     
4.6   Form of Subscription Agreement by and between Evolucia Inc. and Accredited Investors (23)
     
4.7   Form of 14% Callable Promissory Note (23)
     
4.8   Form of Warrant (23)
     
4.9   Form of Security Agreement (23)
     
10.1
  
Cancellation of Royalty Agreement (5)
     
10.2
  
Agreement between the Registrant and Carl Smith dated February 2, 2011(5)
     
10.3
  
Agreement between Sun Energy Solar, Inc. (predecessor in interest to Sunovia Solar, Inc.) and EPIR Technologies, Inc. dated November 1, 2007 (2)
     
10.4
  
Amended and Restated Research, Development and Supply Agreement, dated January 24, 2008, between EPIR Technologies, Inc. and the Registrant (6)
     
10.5
  
Stock Purchase Agreement between EPIR Technologies, Inc. and the Registrant dated January 24, 2008 (6)
     
10.6
  
Sunovia Energy Technologies, Inc. 2008 Incentive Stock Plan dated May 1, 2008 (7)
     
10.7
  
Common Stock Purchase Warrant between the Registrant and EPIR Technologies, Inc. dated April 15, 2009 (8)
     
10.8
  
Amendment No. 1 to the Amended and Restated Research, Development, and Supply Agreement dated April 15, 2009 (8)
     
 
 
10.9
  
Form of Secured Convertible Debenture dated September 15, 2009 (9)
     
10.10
  
Form of Security Agreement dated September 15, 2009(9)
     
10.11
  
Form of Subsidiary Guarantee dated September 15, 2009 (9)
     
10.12
  
Form of Securities Purchase Agreement dated September 15, 2009(9)
     
10.13
  
Form of Promissory Note December, 2009 and January, 2010 (10)
     
10.14
  
Form of Promissory Note February, 2010 (10)
     
10.15
  
Form of Subscription Agreement dated August 24, 2010 ($.02 per share) (11)
     
10.16
  
Executive Employment Agreement between Arthur Buckland and the Registrant effective September 7, 2010 (12)
     
10.17
  
Settlement Agreement between the Registrant and EPIR Technologies, Inc. (13)
     
10.18
  
Form of 9% Convertible Promissory Note (14)
     
10.19
  
Form of 10% Promissory Note (15)
     
10.20
  
Form of 10% Convertible Secured Promissory Note Due July 1, 2013(15)
     
10.21
  
Consulting Agreement with VM5 Ventures, LLC (15)
     
10.22
  
Employment Agreement by and between the Company and Mel Interiano dated June 4, 2012 (16)
     
10.23
  
Termination and Settlement Agreement by and between the Company and VM5 Ventures LLC dated June 4, 2012 (16)
     
10.24
  
Manufacturing, Development and Investment Agreement, dated July 16, 2012, by and between Sunovia Energy Technologies, Inc. and Leader Electronics, Inc. (17)
     
10.25
  
Sales Representation Agreement, dated July 16, 2012, by and between Evolucia, Inc. and Leader r Electronics, Inc. (17)
     
10.26
  
Securities Purchase Agreement, dated July 16, 2012, by and between Sunovia Energy Technologies, Inc. and Jiangsu Leader Electronics, Inc. (17)
     
10.27
  
Executive Employment Agreement by and between Evolucia Inc. and Charles B. Rockwood dated September 13, 2012 (19)
     
10.28   Master Agreement by and between Evolucia Inc. and Sunovia Energy Technologies Europe Sp. z o.o., a Polish Corporation, dated March 19, 2013 (21)
     
10.29   Settlement Agreement and General Release by and between Evolucia Inc., on one hand, and Arthur Buckland, individually, and as custodian for Marc Buckland and Eunice Buckland on the other hand
     
10.30
   Evolucia, Inc. 2013 Incentive Stock Plan (22)
     
 
     
 
     
 
     
 
     
EX-101.INS
  
XBRL INSTANCE DOCUMENT
     
EX-101.SCH
  
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
     
EX-101.CAL
  
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
     
EX-101.LAB
  
XBRL TAXONOMY EXTENSION LABELS LINKBASE
     
EX-101.PRE
  
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
 
(1)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2007
 
(2)  
Incorporated by reference to the Quarterly Report on Form 10QSB filed with the Securities and Exchange Commission on December 21, 2007
 
(3)  
Incorporated by reference to the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on January 1, 2007
 
(4)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 16, 2008.
 
(5)  
Incorporated by reference to the Annual Report on Form 10-K for the Transition Period ended December 31, 2010 filed with the Securities and Exchange Commission on April 20, 2011.
 
(6)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 30, 2008.
 
(7)  
Incorporated by reference to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 15, 2008
 
(8)  
Incorporated by reference to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on March 16, 2009
 
(9)  
Incorporated by reference to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 13, 2009
 
(10)  
Incorporated by reference to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on March 22, 2010.
 
(11)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 24, 2010.
 
(12)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission in August 27, 2010.
 
(13)  
Incorporated by reference to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 15, 2011.
 
(14)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 10, 2011.
 
(15)  
Incorporated by reference to the Annual Report on Form 10-K for the Transition Period ended December 31, 2011 filed with the Securities and Exchange Commission on March 30, 2012.
 
(16)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 8, 2012
 
(17)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 19, 2012.
 
(18)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 16, 2012.
 
(19)  
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 17, 2012.

(20)
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 28, 2013.

(21)
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 26, 2013
 
(22)
Incorporated by reference to the Current Report on Form S-8 Registration Statement filed with the Securities and Exchange Commission on April 25, 2013.

(23)
Incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2013.

 
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EVOLUCIA, INC.
 
 Signature
  
Title
  
Date
         
         
/s/ Mel Interiano   Chief Executive Officer and Director   May 15, 2013
Mel Interiano   (Principal Executive Officer)    
         
/s/ Charles B. Rockwood   Executive Vice President and Chief Financial Officer   May 15, 2013
Charles B. Rockwood   (Principal Financial and Accounting Officer)    
 
 
 
 
 
21



 

 
 

Evolucia Inc. Reports

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