10-Q 1 form10q.htm AMP HOLDING INC. FORM 10-Q form10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended June 30, 2012

or

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

For the transition period from __________ to __________


Commission file number: 000-53704
 
AMP HOLDING INC.
(Exact name of registrant as specified in its charter)

Nevada
26-1394771
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

100 Commerce Drive, Loveland, Ohio  45140
(Address of principal executive offices) (Zip Code)

513-360-4704
Registrant’s telephone number, including area code)

N/A
(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 

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  No x

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
Non-accelerated filer    o
Smaller reporting company    x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.001 par value per share
 38,912,165
(Class)
(Outstanding at August 10, 2012)

 


PART I
FINANCIAL INFORMATION
 
     
3
     
 
     Balance Sheets
4
     
 
5
     
 
6
     
 
7
     
18
     
22
     
22
     
PART II
OTHER INFORMATION
 
     
24
     
24
     
28
     
29
     
29
     
29
     
30
     
 
33


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements
AMP Holding Inc.
 
(A Development Stage Company)
 
 
June 30, 2012 and December 31, 2011
 
             
Assets
 
June 30, 2012
(Unaudited)
   
December 31, 2011
 
             
Current assets:
           
       Cash
  $ 34,011     $ 89,488  
       Accounts receivable
    5,019       5,019  
       Inventory
    122,000       122,000  
       Prepaid expenses and deposits
    39,335       51,210  
      200,365       267,717  
Property, plant and equipment:
               
       Software
    27,721       27,721  
       Leasehold improvements
    19,225       19,225  
       Equipment
    178,124       149,371  
       Vehicles and prototypes
    189,746       189,746  
      414,816       386,063  
       Less accumulated depreciation
    236,771       203,886  
      178,045       182,177  
                 
    $ 378,410     $ 449,894  
                 
Liabilities and Stockholders' Equity (Deficit)
               
                 
Current liabilities:
               
       Accounts payable
  $ 1,567,638     $ 1,367,367  
       Accounts payable, related parties
    293,904       211,640  
       Customer deposits
    25,000       25,000  
       Shareholder advances
    43,000       312,000  
       Convertible debentures
    1,384,407       -  
       Current portion of long-term debt
    23,096       20,641  
      3,337,045       1,936,648  
                 
Long-term debt
    63,889       69,550  
                 
Commitments and contingencies
    -       -  
                 
Stockholders' equity (deficit):
               
       Series A preferred stock, par value of $.001 per share, 75,000,000
               
         shares authorized, 0 shares issued and outstanding at
               
         June 30, 2012 and December 31, 2012
    -       -  
       Common stock, par value of $.001 per share 250,000,000 shares authorized,
               
         38,912,165 shares issued and outstanding at June 30, 2012 and
               
         38,734,650 shares issued and outstanding at December 31, 2011
    38,912       38,735  
       Additional paid-in capital
    12,210,296       12,063,860  
       Stock based compensation
    3,659,796       3,439,870  
       Accumulated deficit during the development stage
    (18,931,528 )     (17,098,769 )
      (3,022,524 )     (1,556,304 )
                 
    $ 378,410     $ 449,894  
                 
See accompanying notes to financial statements.
 
AMP Holding Inc.
 
(A Development Stage Company)
 
 
For the Three and Six Months Ended June 30, 2012 and 2011
 
and for the Period From Inception,
 
February 20, 2007 to June 30, 2012
 
                               
                               
                           
Since Date
of Inception,
February 20,
2007 to
June 30, 2012
(Unaudited)
 
   
Three Months Ended
   
Six Months Ended
     
   
June 30,
2012
(Unaudited)
   
June 30,
2011
(Unaudited)
   
June 30,
2012
(Unaudited)
   
June 30,
2011
(Unaudited)
     
                               
Sales
  $ 222,098     $ 107,535     $ 222,098     $ 190,035     $ 552,840  
                                         
Expenses:
                                       
Payroll and payroll taxes
    398,223       715,762       949,145       1,341,169       6,502,759  
Employee benefits
    42,243       68,086       86,860       133,938       582,939  
Stock based compensation
    66,894       866,581       219,926       1,199,361       3,677,536  
Batteries and motors and supplies
    130,220       338,816       123,507       750,856       2,618,156  
Vehicles, development and testing
    -       -       57,786       -       322,201  
Legal and professional
    42,520       111,729       154,158       281,275       1,585,029  
Advertising
    23,276       81,861       58,418       169,389       895,315  
Consulting
    12,289       125,140       74,468       226,146       1,118,810  
Engineering, temporary labor
    -       2,274       870       18,855       247,919  
Travel and entertainment
    19,169       76,273       48,906       110,807       448,033  
Depreciation
    16,682       16,180       32,885       27,922       262,263  
Rent
    38,625       28,200       76,972       56,250       380,401  
Insurance
    20,426       37,015       37,753       64,674       306,465  
Facilities, repairs & maintenance
    6,673       20,291       12,715       33,099       174,950  
Utilities
    8,514       5,365       18,863       14,834       114,204  
Interest and bank fees
    61,402       1,244       85,871       2,532       112,311  
Loss on sale of assets
    -       -       -       -       13,090  
Other
    6,969       23,509       15,754       32,676       121,987  
      894,125       2,518,326       2,054,857       4,463,783       19,484,368  
                                         
  Net loss during the development stage
  $ (672,027 )   $ (2,410,791 )   $ (1,832,759 )   $ (4,273,748 )   $ (18,931,528 )
                                         
Basic and diluted loss per share
  $ (0.02 )   $ (0.07 )   $ (0.05 )   $ (0.14 )   $ (0.80 )
                                         
Weighted average number of common
                                       
   shares outstanding
    38,912,165       32,192,843       38,838,960       30,235,598       23,564,089  
                                         
See accompanying notes to financial statements.
 


AMP Holding Inc.
 
(A Development Stage Company)
 
 
From Inception, February 20, 2007
 
to June 30, 2012
 
                                                 
   
Common Stock
   
Series A
Preferred Stock
   
Additional
   
Stock
   
Accumulated
Deficit
During the
   
Total
Stockholders'
 
   
Number
of Shares
   
Amount
   
Number
of Shares
   
Amount
   
Paid-in
Capital
   
Based
Compensation
   
Development
Stage
   
Equity
(Deficit)
 
                                                 
Beginning capital - inception
    -     $ -       -     $ -     $ -     $ -     $ -     $ -  
                                                                 
Issuance of common stock, and fulfillment
                                                         
of stock subscriptions receivable
    7,210       900,000       -       -       -       -       -       900,000  
Net loss from operations, period of inception,
                                                         
February 20, 2007 to December 31, 2007
    -       -       -       -       -       -       (456,145 )     (456,145 )
      7,210     $ 900,000       -     $ -     $ -     $ -     $ (456,145 )   $ 443,855  
                                                                 
Issuance of common stock, and fulfillment
                                                         
of stock subscriptions receivable
    4,305       875,000       -       -       -       -       -       875,000  
March 10, 2008 stock dividend
    62,720       -       -       -       -       -       -       -  
Share based compensation for the year
                                                         
ended December 31, 2008
    -       9,757       -       -       -       -       -       9,757  
Net loss from operations for the year
                                                         
ended December 31, 2008
    -       -       -       -       -       -       (1,383,884 )     (1,383,884 )
      74,235     $ 1,784,757       -     $ -     $ -     $ -     $ (1,840,029 )   $ (55,272 )
                                                                 
January 1, 2009 stock re-pricing agreement
    18,025       -                                               -  
Issuance of common stock, and fulfillment
                                                         
of stock subscriptions receivable
    168,210       753,511       -       -       49,989       -       -       803,500  
Share based compensation to
                                                               
December 28, 2009
    -       7,983       -       -       -       -       -       7,983  
Shares issued out of stock option plan on
                                                         
December 31, 2009
    3,220       -       -       -       -       -       -       -  
Net effect of purchase accounting adjustments
    17,508,759       (2,528,479 )     -       -       2,528,479       -       -       -  
Conversion of convertible notes
    -       -       8,375       8       264,992       -       -       265,000  
Net loss from operations for the year
                                                         
ended December 31, 2009
    -       -       -       -       -       -       (1,524,923 )     (1,524,923 )
      17,772,449     $ 17,772       8,375     $ 8     $ 2,843,460     $ -     $ (3,364,952 )   $ (503,712 )
                                                                 
Conversion of convertible note
    29,750       30       -       -       9,970       -       -       10,000  
Issuance of preferred stock, and fulfillment
                                                         
of stock subscriptions receivable
    -       -       625       1       24,999       -       -       25,000  
Issuance of common stock, and fulfillment
                                                         
of stock subscriptions receivable
    9,808,566       9,809       -       -       3,682,530       -       -       3,692,339  
Conversion of account payable
    101,636       102       -       -       86,898       -       -       87,000  
Share based compensation for the year
                                                         
ended December 31, 2010
    -       -       -       -       -       1,436,979       -       1,436,979  
Net loss from operations for the year
                                                         
ended December 31, 2010
    -       -       -       -       -       -       (5,028,106 )     (5,028,106 )
      27,712,401     $ 27,713       9,000     $ 9     $ 6,647,857     $ 1,436,979     $ (8,393,058 )   $ (280,500 )
                                                                 
Issuance of common stock, and fulfillment
                                                         
of stock subscriptions receivable
    9,912,447       9,911       -       -       5,404,830       -       -       5,414,741  
Stock options and warrants exercised
    38,692       39       -       -       12,236       -       -       12,275  
Conversion of preferred stock to common stock
    1,071,110       1,072       (9,000 )     (9 )     (1,063 )     -       -       -  
Share based compensation for the year
                                                         
ended December 31, 2011
    -       -       -       -       -       2,002,891       -       2,002,891  
Net loss from operations for the year
                                                         
ended December 31, 2011
    -       -       -       -       -       -       (8,705,711 )     (8,705,711 )
      38,734,650     $ 38,735       -     $ -     $ 12,063,860     $ 3,439,870     $ (17,098,769 )   $ (1,556,304 )
                                                                 
Issuance of detached warrants in conection
                                                         
with convertible debentures
    -       -       -       -       86,613       -       -       86,613  
Conversion of account payable
    177,515       177       -       -       59,823       -       -       60,000  
Share based compensation for the six months
                                                         
ended June 30, 2012
    -       -       -       -       -       219,926       -       219,926  
Net loss from operations for the six months
                                                         
ended June 30, 2012
    -       -       -       -       -       -       (1,832,759 )     (1,832,759 )
      38,912,165     $ 38,912       -     $ -     $ 12,210,296     $ 3,659,796     $ (18,931,528 )   $ (3,022,524 )
                                                                 
A vehicle with a fair market value of $30,400 and cash of $69,600 was accepted as consideration for issuance of common stock in February 2007.
 
A vehicle with a fair market value of $30,884 and cash of $69,116 was accepted as consideration for issuance of common stock in June 2007.
 
Consulting services valued at $50,000 were accepted as consideration for issuance of common stock in October 2008.
 
Legal services valued at $87,000 were accepted as consideration for issuance of common stock in December 2010.
 
Legal and consulting services valued at $60,000 were accepted as consideration for issuance of common stock in March 2012.
 
                                                                 
See accompanying notes to financial statements.
 

 
AMP Holding Inc.
 
(A Development Stage Company)
 
 
For the Three and Six Months Ended June 30, 2012 and 2011
 
and for the Period From Inception,
 
February 20, 2007 to June 30, 2012
 
                               
                               
                           
Since Date
of Inception,
February 20,
2007 to
June 30, 2012
(Unaudited)
 
   
Three Months Ended
   
Six Months Ended
     
   
June 30,
2012
(Unaudited)
   
June 30,
2011
(Unaudited)
   
June 30,
2012
(Unaudited)
   
June 30,
2011
(Unaudited)
     
                               
Cash flows from operating activities:
                             
Net loss during the development stage
  $ (672,027 )   $ (2,410,791 )   $ (1,832,759 )   $ (4,273,748 )   $ (18,931,528 )
Adjustments to reconcile net loss from operations
                                       
to cash used by operations:
                                       
  Depreciation
    16,682       16,180       32,885       27,922       262,263  
  Loss on sale of assets
    -       -       -       -       13,090  
  Stock based compensation
    66,894       866,581       219,926       1,199,361       3,677,536  
  Amortized discount on convertible debentures
    27,896       -       31,770       -       31,770  
  Legal and consulting services
    -       -       60,000       -       197,000  
Effects of changes in operating assets and liabilities:
                                 
    Accounts receivable
    -       5,594       -       29,023       (5,019 )
    Inventory
    -       (82,000 )     -       (82,000 )     (122,000 )
    Prepaid expenses and deposits
    -       (5,325 )     11,875       (5,750 )     (39,335 )
    Accounts payable
    277,173       (297,536 )     200,271       44,764       1,567,638  
    Accounts payable, related parties
    19,316       (44,649 )     82,264       (19,842 )     293,904  
    Customer deposits
    -       (25,000 )     -       (52,393 )     25,000  
                                         
      Net cash used by operations
    (264,066 )     (1,976,946 )     (1,193,768 )     (3,132,663 )     (13,029,681 )
                                         
Cash flows from investing activities:
                                       
  Capital expenditures
    (28,753 )     (86,348 )     (28,753 )     (86,348 )     (376,650 )
  Proceeds on sale of assets
    -       -       -       -       32,900  
                                         
    Net cash used by investing activities
    (28,753 )     (86,348 )     (28,753 )     (86,348 )     (343,750 )
                                         
Cash flows from financing activities:
                                       
  Proceeds from debentures and notes payable
    539,250       -       1,439,250       -       1,599,250  
  Payments on notes payable
    -       -       -       -       (150,000 )
  Proceeds from long-term debt
    -       -       -       -       50,000  
  Payments on long-term debt
    (1,610 )     (1,532 )     (3,206 )     (3,052 )     (11,379 )
  Shareholder advances
    (262,000 )     -       (269,000 )     -       43,000  
  Issuance of common and preferred stock
    -       3,529,651       -       4,510,017       11,876,571  
                                         
      Net cash provided by financing activities
    275,640       3,528,119       1,167,044       4,506,965       13,407,442  
                                         
Change in cash and cash equivalents
    (17,179 )     1,464,825       (55,477 )     1,287,954       34,011  
Cash and cash equivalents at inception, February 20, 2007
                              -  
Cash and cash equivalents at December 31, 2010
                            385,293          
Cash and cash equivalents at March 31, 2011
            208,422                          
Cash and cash equivalents at June 30, 2011
          $ 1,673,247             $ 1,673,247          
Cash and cash equivalents at December 31, 2011
                    89,488                  
Cash and cash equivalents at March 31, 2012
    51,190                                  
Cash and cash equivalents at June 30, 2012
  $ 34,011             $ 34,011             $ 34,011  
                                         
Supplemental disclosure of non-cash activities:
                                       
Vehicles valued at $61,284 were contributed as consideration for issuance of common stock during the period from
 
inception, February 20, 2007, to December 31, 2007.
                                 
Consulting services valued at $50,000 were accepted as consideration for issuance of common stock in October 2008.
 
During March 2010 a note payable of $10,000 was converted to 29,750 shares of common stock.
         
A vehicle valued at $33,427 was acquired through bank financing in September 2010.
                 
Legal services valued at $87,000 were accepted as consideration for issuance of common stock in December 2010.
 
Equipment valued at $14,937 was acquired through debt financing in December 2011.
                 
Legal and consulting services valued at $60,000 were accepted as consideration for issuance of common stock in March 2012.
 
Detachable warrants associated with convertible debentures valued at $78,300 were recorded as an increase to additional
 
paid-in capital in January and February 2012.
                                 
                                         
See accompanying notes to financial statements.
 

 
6

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)


The following accounting principles and practices are set forth to facilitate the understanding of data presented in the financial statements:

Nature of operations
AMP Holding Inc., formerly known as Title Starts Online, Inc. (the Company), incorporated in the State of Nevada in 2007 with $3,100 of capital from the issuance of common shares to the founding shareholder. On August 11, 2008 the Company received a Notice of Effectiveness from the U.S. Securities and Exchange Commission, and on September 18, 2008, the Company closed a public offering in which it accepted subscriptions for an aggregate of 200,000 shares of its common stock, raising $50,000 less offering costs of $46,234. With this limited capital the Company did not commence operations and remained a “shell company” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended).

On December 28, 2009, the Company entered into and closed a Share Exchange Agreement with the Shareholders of Advanced Mechanical Products, Inc. (n/k/a AMP Electric Vehicles, Inc.) (AMP) pursuant to which the Company acquired 100% of the outstanding securities of AMP in exchange for 14,890,904 shares of the Company’s common stock. Considering that, following the merger, the AMP Shareholders control the majority of the outstanding voting common stock of the Company, and effectively succeeded the Company’s otherwise minimal operations to those that are AMP.  AMP is considered the accounting acquirer in this reverse-merger transaction.  A reverse-merger transaction is considered and accounted for as a capital transaction in substance; it is equivalent to the issuance of AMP securities for net monetary assets of the Company, which are deminimus, accompanied by a recapitalization. Accordingly, goodwill or other intangible assets have not been recognized in connection with this reverse merger transaction.  AMP is the surviving entity and the historical financials following the reverse merger transaction will be those of AMP.  The Company was a shell company immediately prior to the acquisition of AMP pursuant to the terms of the Share Exchange Agreement.  As a result of such acquisition, the Company operations are now focused on the design, marketing and sale of modified automobiles with an all-electric power train and battery systems.  Consequently, we believe that acquisition has caused the Company to cease to be a shell company as it now has operations.  The Company formally changed its name to AMP Holding Inc. on May 24, 2010.

AMP’s vision is to bring electrification to full size mainstream vehicles that are popular with both fleets and consumers. The largest vehicle segment in the U.S. is the SUV segment and we have one of the only electric full size SUV solutions available. AMP designs, manufactures and is offering for sale modified automobiles and commercial trucks with an all electric drivetrain and battery system that allows the vehicle to perform similar to the original vehicle, but with no emissions or burning of fossil fuels. This is due to AMP’s patent pending, powerful, yet highly efficient electric powertrain. Revenues since the inception of the Company, February 20, 2007, through the date of these financial statements have not been significant and consist of customer vehicle conversions and sales of converted vehicles.

Development stage company
Based on the Company's business plan, it is a development stage company since planned principal operations resulting in revenue have not fully commenced.  Accordingly, the Company presents its financial statements in conformity with the accounting principles generally accepted in the United States of America that apply to developing enterprises.  As a development stage enterprise, the Company discloses its retained earnings (or deficit accumulated) during the development stage and the cumulative statements of operations and cash flows from commencement of development stage to the current balance sheet date.  The development stage began in 2007 when the Company was organized.

 
7

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

Basis of presentation
The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  However, the Company has limited revenues and has negative working capital and stockholders’ deficits. During the first half of 2012 the lack of liquidity delayed the Company from paying its employees their full salaries.  Employee layoffs have occurred and additional layoffs are considered as a means of conserving cash. These conditions raise substantial doubt about the ability of the Company to continue as a going concern.

In view of these matters, continuation as a going concern is dependent upon the continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations.  The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.

The Company has continued to raise capital.  Management believes the proceeds from these offerings, future offerings, and the Company’s anticipated revenue provides an opportunity to continue as a going concern.  If additional funding is required, the Company plans to obtain working capital from either debt or equity financing from the sale of common, preferred stock, and/or convertible debentures.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from these estimates.

Certain reclassifications were made to the prior year financial statements to conform to the current year presentation.  These reclassifications had no effect on previously reported results of operation or stockholders’ equity (deficit).

Financial instruments
The carrying amounts of financial instruments including cash, accounts receivable, inventory, cash overdraft, accounts payable and short-term debt approximate fair value because of the relatively short maturity of these instruments.

Inventory
Inventory, stated at cost, includes vehicles being converted for sale.

Property and depreciation
Property and equipment is recorded at cost.  Major renewals and improvements are capitalized while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed.  When property and equipment is retired or otherwise disposed of, a gain or loss is realized for the difference between the net book value of the asset and the proceeds realized thereon.  Depreciation is calculated using the straight-line method, based upon the following estimated useful lives:
 
Software:  6 years
Equipment:  5 years
Vehicles and prototypes:  3 - 5 years


 
8

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

Capital stock
On April 22, 2010 the directors of the Company approved a forward stock split of the common stock of the Company on a 14:1 basis.  On May 12, 2010 the stockholders of the Company voted to approve the amendment of the certificate of incorporation resulting in a decrease of the number of shares of Common stock.  The Company filed a 14c definitive information statement with the Securities and Exchange Commission and mailed the same to its shareholders. Management filed the certificate of amendment decreasing the authorized shares of common stock with the State of Nevada on September 8, 2010.

The capital stock of the Company is as follows:

Preferred Stock - The Company has authorized 75,000,000 shares of preferred stock with a par value of $.001 per share. These shares may be issued in series with such rights and preferences as may be determined by the Board of Directors. The Series A Stock is convertible, at any time at the option of the holder, into common shares of the Company based on a conversion price of $0.336 per share.  The holders of the Series A Stock are not entitled to convert the Series A Stock and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.  The Series A Stock has voting rights on an as converted basis, does not pay dividends, and does not provide any liquidation rights.

Common Stock - The Company has authorized 250,000,000 shares of common stock with a par value of $.001 per share.

Revenue recognition / customer deposits
It is the Company's policy that revenues will be recognized in accordance with SEC Staff Bulletin (SAB) No. 104, "Revenue Recognition". Under SAB 104, product revenues (or service revenues) are recognized when persuasive evidence of an arrangement exists, delivery has occurred (or service has been performed), the sales price is fixed and determinable, and collectability is reasonably assured.  Customer deposits include monies from customers to reserve a production slot for conversion of an OEM power train to the AMP all electric power train.  The final retail price and delivery date are yet to be determined.  Customer deposits are subject to a full refund at the request of the customer.

Advertising
Advertising and public relation costs are charged to operations when incurred. Advertising and public relation expense was approximately $23,000 and $82,000 for the three months ended June 30, 2012 and 2011, and $58,000 and $169,000 for the six months ended June 30, 2012 and 2011, and $895,000 for the period from inception to June 30, 2012, respectively consisting primarily of travel and related expenses for attendance at car shows and industry expositions.


 
9

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

Income taxes
With the consent of its shareholders, at the date of inception, AMP elected under the Internal Revenue Code to be taxed as an S corporation. Since shareholders of an S corporation are taxed on their proportionate share of the Company’s taxable income, an S corporation is generally not subject to either federal or state income taxes at the corporate level.  On December 28, 2009 pursuant to the merger transaction the Company revoked its election to be taxed as an S-corporation.

As no taxable income has occurred from the date of this merger to June 30, 2012 cumulative deferred tax assets of approximately $4,049,400 are fully reserved, and no provision or liability for federal or state income taxes has been included in the financial statements.  Net operating losses of approximately $3,600,000 are available for carryover to be used against taxable income generated through 2030, net operating losses of approximately $6,700,000 are available for carryover to be used against taxable income generated through 2031, and net operating losses of approximately $1,610,000 are available for carryover to be used against taxable income generated through 2032.  The Company had not filed income tax returns during its period as a shell company.

Uncertain tax positions
The Company adopted the provisions of Accounting for Uncertainty in Income Taxes. Those provisions clarify the accounting and recognition for income tax positions taken or expected to be taken in the Company’s income tax returns.  The Company’s income tax filings are subject to audit by various taxing authorities. The years of filings open to these authorities and available for audit are 2008 - 2011.  The Company's policy with regard to interest and penalties is to recognize interest through interest expense and penalties through other expense.  In evaluating the Company’s tax provisions and accruals, future taxable income, and the reversal of temporary differences, interpretations and tax planning strategies are considered. The Company believes their estimates are appropriate based on current facts and circumstances.

Research and development costs
The Company expenses research and development costs as they are incurred.  Research and development expense incurred was approximately $535,000 and $1,137,000 for the three months ended June 30, 2012 and 2011, and $1,176,000 and $2,256,000 for the six months ended June 30, 2012, and 2011, and $10,790,000 for the period from inception to June 30, 2012, respectively, consisting of consulting, payroll, payroll taxes, engineering temporaries, purchased supplies, legal fees, parts and small tools.

Basic and diluted loss per share
Basic loss per share is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.  For all periods, all of the Company’s common stock equivalents were excluded from the calculation of diluted loss per common share because they were anti-dilutive, due to the Company’s net losses.

Stock based compensation
The Company accounts for its stock based compensation in accordance with “Share-Based Payments” (codified in FASB ASC Topic 718 and 505).  The Company recognizes in its statement of operations the grant-date fair value of stock options and warrants issued to employees and non-employees.  The fair value is estimated on the date of grant using a lattice-based valuation model that uses assumptions concerning expected volatility, expected term, and the expected risk-free rate of return.  For the awards granted in 2012 and 2011, the expected volatility was estimated by management as 50% based on a range of forecasted results.  The expected term of the awards granted was assumed to be the contract life of the option or warrant (one, two, three, five or ten years as determined in the specific arrangement).  The risk-free rate of return was based on market yields in effect on the date of each grant for United States Treasury debt securities with a maturity equal to the expected term of the award.


 
10

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

Related party transactions
Certain stockholders and stockholder family members have advanced funds or performed services for the Company.  These services are believed to be at market rates for similar services from non-related parties.  Related party accounts payable are segregated in the balance sheet.  An experimental vehicle was sold to a stockholder in 2010 for $25,000, which also approximates the selling price to non-related parties.

Subsequent events
The Company evaluates events and transactions occurring subsequent to the date of the financial statements for matters requiring recognition or disclosure in the financial statements.

From July 2, 2012 through July 31, 2012, the Company entered into Securities Purchase Agreements and Security Agreements with several accredited investors (the “2012 Investors”) providing for the sale by the Company to the 2012 Investors of Secured Convertible Debentures in the aggregate amount of $500,000 (the "2012 Notes").  The Company received the proceeds in connection with these financings between July 2, 2012 and August 8, 2012.  The 2012 Notes mature one year from their respective effective dates (the "Maturity Dates") and interest associated with the 2012 Notes is 10% per annum, which is payable on the Maturity Dates.  The 2012 Notes are convertible into shares of common stock of the Company, at the 2012 Investors’ option, at a conversion price of $0.50.  Upon the closing of any financing in an amount greater than $3,000,000 (the “Financing”), the Company, in its sole discretion, may require that the 2012 Notes be converted into securities of the Company at the same terms of the Financing.

On August 10, 2012, the Company and James E. Taylor (“Taylor”) entered into an Agreement (the “Release”) pursuant to which Taylor resigned as the CEO of the Company and continues to serve as the Chairman of the Board of Directors of the Company.  Additionally, under the terms of the Release the Company and Taylor settled the amount of fees owing to Taylor for serving as the Company’s CEO.  For serving as the Chairman of the Board of Directors, the Company issued to Taylor a stock option to acquire 300,000 shares of common stock at an exercise price of $0.15.  In consideration for Taylor’s execution of the Release, the Company agreed to pay Taylor the amount of $87,500 in back pay and $43,333 in past Board of Directors fees (collectively, the “Amount”).  Upon raising adequate capital, the Company agreed to use its best efforts to develop a payment schedule with respect to the Amount owed to Taylor.  The Company will not make any other payments to or on behalf of Taylor, whether in the form of bonuses, severance, paid time off, profit sharing, or otherwise.

2.  
CONVERTIBLE DEBENTURES AND LONG-TERM DEBT

From January 6, 2012 through June 30, 2012, the Company entered into Securities Purchase Agreements and Security Agreements with several accredited investors (the “2012 Investors”) providing for the sale by the Company to the 2012 Investors of Secured Convertible Debentures in the aggregate amount of $1,439,250 (the "2012 Notes").  The Company received the proceeds in connection with these financings between January 6, 2012 and June 30, 2012.  Further a shareholder, director and officer converted secured and unsecured loans provided to the Company from September 30, 2011 to June 5, 2012 in the aggregate amount of $389,250 into the 2012 Notes and 2012 Warrants.  The 2012 Notes mature one year from their respective effective dates (the "Maturity Dates") and interest associated with the 2012 Notes is 10% per annum, which is payable on the Maturity Dates.  The 2012 Notes are convertible into shares of common stock of the Company, at the 2012 Investors’ option, at a conversion price of $0.50.  Upon the closing of any financing in an amount greater than $3,000,000 (the “Financing”), the Company, in its sole discretion, may require that the 2012 Notes be converted into securities of the Company at the same terms of the Financing.

In addition to the 2012 Notes, the 2012 Investors also received common stock purchase warrants (the “2012 Warrants”) to acquire 1,439,250 shares of common stock of the Company.  The 2012 Warrants are exercisable for three years at an exercise price of $0.50.  The value of the detachable 2012 Warrants was determined using a lattice-based valuation model that used an expected volatility, estimated by management as 50% based on a range of forecasted results, and an expected risk-free rate of return, based on market yields in effect on the grant dates for United States Treasury debt securities with a three year maturity.  The $86,613 value of the detachable 2012 Warrants was recorded as an increase in additional paid-in capital and a discount against the 2012 Notes.  The discount on the 2012 notes is being amortized as interest expense over one year.

The 2012 Notes and the 2012 Warrants carry standard anti-dilution provisions but in no event may the conversion price be reduced below $0.25.  Further, the 2012 Investors will have the right to participate in the next financing on a pro-rata basis up to $1,000,000.

Long-term debt consists of three notes payable.  The first is a $22,048 note payable to a bank due in monthly installments of $635 including interest at 5.04%, with the final payment due August 2015. The note is secured by equipment which has a net book value of $21,173 at June 30, 2012. The second is a $14,937 note payable due in monthly installments of $439 including interest at 8.00% with the final payment due December 2014.  The note is secured by equipment which has a net book value of $13,194 at June 30, 2012.  The third is a $50,000 note payable to the City of Loveland due in annual payments of $10,241 including interest at 0.80% with the final payment due October 2016.

Aggregate maturities of long-term debt are as follows:
 
2012   $ 17,435  
2013     21,416  
2014     23,147  
2015     14,822  
2016     10,165  
    $ 86,985  

The note payable to the City of Loveland contains incentives whereby each annual payment may be forgiven by the City upon the Company meeting minimum job creation benchmarks of an average of 40 full time employees during the preceding 12 month period and an average monthly payroll of $250,000.

3.  
 SHAREHOLDER ADVANCES

On November 30, 2009, a shareholder, director and officer of the company advanced $43,000 to the Company for working capital needs.  In consideration of such advance, the Company issued a Promissory Note with interest at 3% per annum due November 1, 2011.  The maturity date for this note was extended to September 30, 2012.

In addition, on September 30, 2011, October 31, 2011, May 30, 2012, May 31, 2012 and June 5, 2012 the same shareholder advanced $62,000, $200,000, $12,250, $15,000 and $100,000, respectively, to the Company for working capital needs.  In consideration of these advances, the Company issued Promissory Notes with interest rates from 6% to 10% per annum due September 30, 2012.  On June 30, 2012, these secured and unsecured loans in the aggregate amount of $389,250 were converted into the 2012 Notes and 2012 Warrants.


 
11

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

4.  
 LEASE OBLIGATIONS

On October 1, 2011 the Company began leasing operating facilities under an agreement expiring on September 30, 2018.  Future minimum monthly lease payments under the agreement are $11,875 for the first year and increase 3% each year.  Prepaid expenses and deposits include a security deposit equal to $12,275 and prepaid rent of $11,875.  Aggregate maturities of lease obligations are as follows:
 
2012   $ 72,319  
2013     147,876  
2014     152,312  
2015     156,881  
2016     161,588  
2017 and thereafter     294,050  
    $ 985,026  

The Company also leases office space for approximately $1,000 per month on a month to month agreement.  Through January 2012 the Company also leased two apartments for approximately $2,200 per month on month to month agreements.  Prior to October 2011 the Company leased operating facilities under terms of an operating type lease with monthly payments of $8,500.  Prior to December 2009 the Company leased office/warehouse space under terms of an operating type lease with monthly payments of $1,650.  Total rent expense under these operating type leases was $38,625 and $28,200 for the three months ended June 30, 2012 and 2011, and $76,972 and $56,250 for the six months ended June 30, 2012 and 2011, and $380,401 for the period from inception to June 30, 2012.

5.  
 STOCK BASED COMPENSATION

Options to directors, officers and employees
The Company maintains, as adopted by the board of directors, the 2010 Incentive Stock Plan and the 2011 Incentive Stock Plan (the plans) providing for the issuance of up to 3,000,000 options to employees, officers, directors or consultants of the Company.  Incentive stock options granted under the plans may only be granted with an exercise price of not less than fair market value of the Company’s common stock on the date of grant (110% of fair market value for incentive stock options granted to principal stockholders).  Non-qualified stock options granted under the plans may only be granted with an exercise price of not less than 85% of the fair market value of the Company’s common stock on the date of grant.  Awards under the plans may be either vested or unvested options.  The unvested options vest ratably over eight quarters for options with a five year term and after one year for options with a two year term.

In addition to the plan, the Company has granted, on various dates, stock options to directors, officers and employees to purchase common stock of the Company.  The terms, exercise prices and vesting of these awards vary.


 
12

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

The following table summarizes option activity for directors, officers and employees:

   
Number of Shares
   
Weighted
Average
Exercise Price
per Share
   
Weighted
Average Grant
Date Fair Value
 per Share
   
Weighted
Average
Remaining
Exercise Term
in Months
 
Outstanding at January 1, 2010
    -     $ -     $ -       -  
Granted
    4,940,000       0.56       0.33       81  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2010
    4,940,000     $ 0.56     $ 0.33       77  
Exercisable at December 31, 2010
    1,854,625     $ 0.53     $ 0.32       75  
Granted
    3,425,000       0.63       0.28       54  
Exercised
    (29,750 )     0.41       0.26       -  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2011
    8,335,250     $ 0.59     $ 0.31       58  
Exercisable at December 31, 2011
    4,588,875     $ 0.57     $ 0.31       60  
Granted
    -       -       -       -  
Exercised
    -       -       -       -  
Forfeited or expired
    (1,950,000 )     0.58       0.29       56  
Outstanding at June 30, 2012
    6,385,250     $ 0.59     $ 0.31       50  
Exercisable at June 30, 2012
    5,225,250     $ 0.58     $ 0.30       48  
 
The Company recorded $141,392, $855,246, $588,202 and $1,602,581 compensation expense for stock options to directors, officers and employees for the six months ended June 30, 2012, for the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to June 30, 2012, respectively.  As of June 30, 2012, unrecognized compensation expense of $413,032 is related to non-vested options granted to directors, officers and employees which is anticipated to be recognized over the next 12 months, commensurate with the vesting schedules.


 
13

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

Options to consultants
The Company has also granted, on various dates, stock options to purchase common stock of the Company to consultants for services previously provided to the Company.  The terms, exercise prices and vesting of these awards vary.

The following table summarizes option activity for consultants:

   
Number of Shares
   
Weighted
Average
Exercise Price
per Share
   
Weighted
Average Grant
Date Fair Value
 per Share
   
Weighted
Average
Remaining
Exercise Term
in Months
 
Outstanding at January 1, 2010
    -     $ -     $ -       -  
Granted
    810,000       0.67       0.23       36  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2010
    810,000     $ 0.67     $ 0.23       32  
Exercisable at December 31, 2010
    380,000     $ 0.63     $ 0.22       31  
Granted
    70,000       0.59       0.18       31  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2011
    880,000     $ 0.66     $ 0.23       20  
Exercisable at December 31, 2011
    755,000     $ 0.64     $ 0.22       20  
Granted
    -       -       -       -  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at June 30, 2012
    880,000     $ 0.66     $ 0.23       14  
Exercisable at June 30, 2012
    880,000     $ 0.66     $ 0.23       14  
                                 

The Company recorded $32,633, $83,265, $82,900 and $198,797 compensation expense for stock options to consultants for the six months ended June 30, 2012, the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to June 30, 2012, respectively.  There is no unrecognized compensation expense for these options because they were fully vested as of June 30, 2012.


 
14

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

Warrants to accredited investors
Since December 2010, common stock sold by the Company has included common stock purchase warrants to acquire shares of common stock of the Company.  For each ten shares sold, each investor received a warrant to purchase five shares of common stock for a period of two years at an exercise price of $0.80 per share.  The securities were offered and sold to the investors in private placement transactions 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.

The following table summarizes warrant activity for accredited investors:
   
Number of Shares
   
Weighted
Average
Exercise Price
per Share
   
Weighted
Average Grant
Date Fair Value
 per Share
   
Weighted
Average
Remaining
Exercise Term
in Months
 
Outstanding at January 1, 2010
    -     $ -     $ -       -  
Granted
    785,001       0.80       0.11       24  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2010
    785,001     $ 0.80     $ 0.11       24  
Exercisable at December 31, 2010
    785,001     $ 0.80     $ 0.11       24  
Granted
    4,956,224       0.80       0.11       24  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2011
    5,741,225     $ 0.80     $ 0.11       17  
Exercisable at December 31, 2011
    5,741,225     $ 0.80     $ 0.11       17  
Granted
    950,000       0.50       0.09       36  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at June 30, 2012
    6,691,225     $ 0.76     $ 0.11       14  
Exercisable at June 30, 2012
    6,691,225     $ 0.76     $ 0.11       14  
 
The Company recorded $0, $546,824, $86,350 and $633,174 compensation expense for stock warrants to accredited investors for the six months ended June 30, 2012, the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to June 30, 2012, respectively.  There is no unrecognized compensation expense for these warrants because they are fully vested at date of grant.


 
15

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

Warrants to placement agent and consultants
The Company has compensated the placement agent for assisting in the sale of the Company’s securities by paying the placement agent commissions and issuing the placement agent common stock purchase warrants to purchase shares of the Company’s common stock.  The warrants have a five year term and various exercise prices.

The Company has also granted, on various dates, stock warrants to purchase common stock of the Company to consultants for services previously provided to the Company.  The terms, exercise prices and vesting of these awards vary.

The following table summarizes warrant activity for the placement agent and consultants:
   
Number of Shares
   
Weighted
Average
Exercise Price
per Share
   
Weighted
Average Grant
Date Fair Value
 per Share
   
Weighted
Average
Remaining
Exercise Term
in Months
 
Outstanding at January 1, 2010
    614,680     $ 0.39     $ 0.18       60  
Granted
    3,103,304       0.64       0.21       57  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2010
    3,717,984     $ 0.60     $ 0.21       52  
Exercisable at December 31, 2010
    2,617,984     $ 0.61     $ 0.19       51  
Granted
    887,910       0.60       0.27       60  
Exercised
    (44,638 )     0.40       0.18       39  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2011
    4,561,256     $ 0.60     $ 0.22       43  
Exercisable at December 31, 2011
    4,081,256     $ 0.59     $ 0.21       42  
Granted
    -       -       -       -  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at June 30, 2012
    4,561,256     $ 0.60     $ 0.22       37  
Exercisable at June 30, 2012
    4,273,756     $ 0.59     $ 0.21       36  
 
The Company recorded $45,901, $373,876, $497,527 and $917,304 compensation expense for stock warrants to the placement agent and consultants for the six months ended June 30, 2012, the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to June 30, 2012, respectively.  As of June 30, 2012, unrecognized compensation expense of $94,875 is related to non-vested warrants granted to consultants which is anticipated to be recognized over the next 36 months, commensurate with the vesting schedules.  There is no unrecognized compensation expense for the placement agent warrants because they are fully vested at date of grant.


 
16

AMP Holding Inc.
(A Development Stage Company)
 Notes to Financial Statements
For the Three and Six Months Ended June 30, 2012 and 2011
and for the Period From Inception,
February 20, 2007 to June 30, 2012
(Unaudited)

Warrants to directors and officers
The Company has issued to certain directors and officers common stock purchase warrants to acquire shares of common stock at an exercise price of $2.00 per share for a period of five years.  Additionally, under the terms of a Promissory Note issued to an officer and director, common stock purchase warrants were issued to acquire 100,000 shares of common stock at an exercise price of $0.50 per share for a period of two years.

The following table summarizes warrant activity for directors and officers:
   
Number of Shares
   
Weighted
Average
Exercise Price
per Share
   
Weighted
Average Grant
Date Fair Value
 per Share
   
Weighted
Average
Remaining
Exercise Term
in Months
 
Outstanding at January 1, 2010
    -     $ -     $ -       -  
Granted
    1,400,000       2.00       0.13       60  
Exercised
    -       -       -       -  
Forfeited or expired
    -       -       -       -  
Outstanding at December 31, 2010
    1,400,000     $ 2.00     $ 0.13       59  
Exercisable at December 31, 2010
    1,400,000     $ 2.00     $ 0.13       59  
Granted
    1,600,000       1.91       0.09