Edgar Filing: AMP Holding Inc.

AMP Holding Inc. and Susidiaries

(A Development Stage Company)

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

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 March 31, 2013

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	79,697,130
(Class)	(Outstanding at May 13, 2013)

Table of Contents

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Operations	4

	Consolidated Statements of Stockholders’ Equity (Deficit)	5

	Consolidated Statements of Cash Flows	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	26

PART II	OTHER INFORMATION	27

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	33

	SIGNATURES	36

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Balance Sheets

March 31, 2013 and December 31, 2012


Assets	March 31, 2013 (Unaudited)			December 31, 2012

Current assets:
Cash and cash equivalents	$	111,875		$	39,819
Inventory		441,002			41,002
Prepaid expenses and deposits		40,989			13,025
		593,866			93,846
Property, plant and equipment:
Land		300,000			-
Buildings		3,800,000			-
Leasehold improvements		19,225			19,225
Software		27,721			27,721
Equipment		670,120			170,120
Vehicles and prototypes		164,959			164,959
		4,982,025			382,025
Less accumulated depreciation		270,349			255,178
		4,711,676			126,847

	$	5,305,542		$	220,693

Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
Accounts payable	$	1,138,734		$	1,253,228
Accounts payable, related parties		319,129			336,556
Customer deposits		170,000			60,000
Shareholder advances		558,000			558,000
Current portion of long-term debt		377,171			230,756
		2,563,034			2,438,540

Long-term debt		2,448,632			362,186

Commitments and contingencies		-			-

Stockholders' equity (deficit):
Series A preferred stock, par value of $.001 per share 75,000,000 shares
shares authorized, 0 shares issued and outstanding at March 31, 2013
and December 31, 2012		-			-
Common stock, par value of $.001 per share 250,000,000 shares authorized,
76,622,130 shares issued and outstanding at March 31, 2013 and
55,955,463 shares issued and outstanding at December 31, 2012		76,622			55,955
Additional paid-in capital		19,063,380			14,956,547
Stock based compensation		4,108,839			3,778,723
Accumulated deficit during the development stage		(22,954,965	)		(21,371,258	)
		293,876			(2,580,033	)

	$	5,305,542		$	220,693

See accompanying notes to consolidated financial statements.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Operations

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

	Three Months Ended March 31, 2013			Three Months Ended March 31, 2012			Since Date of Inception, February 20, 2007 to March 31, 2013
	(Unaudited)			(Unaudited)			(Unaudited)
Sales	$	-		$	-		$	602,840

Expenses:
Payroll and payroll taxes		340,167			550,922			7,667,013
Employee benefits		29,303			44,617			682,546
Stock based compensation		330,116			153,032			4,126,579
Batteries and motors and supplies		153,732			(6,713	)		2,889,288
Legal and professional		148,929			111,638			2,289,683
Advertising		34,735			35,142			1,301,115
Consulting		325,471			62,179			1,428,876
Travel and entertainment		16,859			29,737			501,563
Rent		39,694			38,347			491,692
Insurance		37,850			17,327			423,469
Vehicles, development and testing		32,900			57,786			355,101
Depreciation		15,171			16,203			308,178
Interest and bank fees		28,639			24,469			285,966
Engineering, temporary labor		1,852			870			253,138
Facilities, repairs & maintenance		33,640			6,042			238,223
Utilities		13,749			10,349			148,704
Loss on sale of assets		-			-			27,544
Other		900			8,785			139,127
		1,583,707			1,160,732			23,557,805

Net loss during the development stage	$	(1,583,707	)	$	(1,160,732	)	$	(22,954,965	)

Basic and diluted loss per share	$	(0.03	)	$	(0.03	)	$	(0.86	)

Weighted average number of common
shares outstanding		60,331,279			38,765,755			26,743,007

See accompanying notes to consolidated financial statements.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Stockholders' Equity (Deficit)

From Inception, February 20, 2007

to March 31, 2013


	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 connection
with convertible debentures		-		-			-			-			91,493			-		-			91,493
Conversion of debentures and interest		10,227,070		10,227			-			-			2,035,187			-		-			2,045,414
Conversion of account payable		6,993,743		6,993			-			-			766,007			-		-			773,000
Share based compensation for the year
ended December 31, 2012		-		-			-			-			-			338,853		-			338,853
Net loss from operations for the year
ended December 31, 2012		-		-			-			-			-			-		(4,272,489	)		(4,272,489	)
		55,955,463	$	55,955			-		$	-		$	14,956,547		$	3,778,723	$	(21,371,258	)	$	(2,580,033	)

Issuance of common stock, and fulfillment
of stock subscriptions receivable		18,425,000		18,425			-			-			3,666,575			-		-			3,685,000
Conversion of convertible note		500,000		500			-			-			99,500			-		-			100,000
Conversion of account payable		1,741,667		1,742			-			-			340,758			-		-			342,500
Share based compensation for the three months
ended March 31, 2013		-		-			-			-			-			330,116		-			330,116
Net loss from operations for the three months
ended March 31, 2013		-		-			-			-			-			-		(1,583,707	)		(1,583,707	)
		76,622,130	$	76,622			-		$	-		$	19,063,380		$	4,108,839	$	(22,954,965	)	$	293,876

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.

Consulting services valued at $87,000 were accepted as consideration for issuance of common stock in December 2010.

Consulting services valued at $60,000, $55,000, and $203,000 were accepted as consideration for issuance of common stock in March, October, and December 2012, respectively.

Investment Agreement fees valued at $375,000 were accepted as consideration for issuance of common stock in August 2012.

Legal services valued at $40,000, $15,000, and $25,000 were accepted as consideration for issuance of common stock in September, November, and December 2012, respectively.

Consulting services valued at $302,500 were accepted as consideration for issuance of common stock in March 2013.

Legal services valued at $40,000 were accepted as consideration for issuance of common stock in March 2013.

See accompanying notes to consolidated financial statements.

Table of Contents

	Three Months Ended March 31, 2013			Three Months Ended March 31, 2012			Since Date of Inception, February 20, 2007 to March 31, 2013
	(Unaudited)			(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss during the development stage	$	(1,583,707	)	$	(1,160,732	)	$	(22,954,965	)
Adjustments to reconcile net loss from operations
to cash used by operations:
Depreciation		15,171			16,203			308,178
Loss on sale of assets		-			-			27,544
Stock based compensation		330,116			153,032			4,126,579
Interest expense on convertible debentures		-			-			106,164
Amortized discount on convertible debentures		-			3,874			91,493
Legal, consulting and investment services		342,500			60,000			1,252,500
Effects of changes in operating assets and liabilities:
Inventory		-			-			(41,002	)
Prepaid expenses and deposits		(27,964	)		11,875			(40,989	)
Accounts payable		(114,494	)		(76,902	)		1,652,370
Accounts payable, related parties		(17,427	)		62,948			319,129
Customer deposits		110,000			-			170,000

Net cash used by operations		(945,805	)		(929,702	)		(14,982,999	)

Cash flows from investing activities:
Initial purchase of AMP Trucks assets		(5,000,000	)		-			(5,000,000	)
Capital expenditures		-			-			(376,650	)
Proceeds on sale of assets		-			-			38,900

Net cash used by investing activities		(5,000,000	)		-			(5,337,750	)

Cash flows from financing activities:
Proceeds from debentures		-			900,000			1,939,250
Proceeds from notes payable		100,000			-			260,000
Payments on notes payable		-			-			(150,000	)
Proceeds from long-term debt		2,250,000			-			2,300,000
Payments on long-term debt		(17,139	)		(1,596	)		(36,197	)
Shareholder advances, net of repayments		-			(7,000	)		558,000
Issuance of common and preferred stock		3,685,000			-			15,561,571

Net cash provided by financing activities		6,017,861			891,404			20,432,624

Change in cash and cash equivalents		72,056			(38,298	)		111,875
Cash and cash equivalents at inception, February 20, 2007								-
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 December 31, 2012		39,819
Cash and cash equivalents at March 31, 2013	$	111,875					$	111,875


Supplemental disclosure of non-cash activities:
Vehicles valued at $61,284 were contributed as consideration for issuance of common stock in February 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.
Consulting 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.
Consulting services valued at $60,000, $55,000, and $203,000 were accepted as consideration for issuance of common stock in March,
October, and December 2012, respectively.
Detachable warrants associated with convertible debentures valued at $91,493 were recorded as increases to additional paid-in capital
from January to August 2012.
Investment Agreement fees valued at $375,000 were accepted as consideration for issuance of common stock in August 2012.
Legal services valued at $40,000, $15,000, and $25,000 were accepted as consideration for issuance of common stock in September,
November, and December 2012, respectively.
During November 2012 debentures for $1,939,250 and interest of $106,164 were converted to 10,227,070 shares of common stock.
During December 2012 accounts payable of $513,636 were converted to notes payable.
During February 2013 a note payable of $100,000 was converted to 500,000 shares of common stock.
Consulting services valued at $302,500 were accepted as consideration for issuance of common stock in March 2013.
Legal services valued at $40,000 were accepted as consideration for issuance of common stock in March 2013.

See accompanying notes to consolidated financial statements.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINICPLES

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.

Since the acquisition, the Company has devoted the majority of its resources to the development of an all-electric drive system capable of moving heavy large vehicles ranging from full size SUV’s up to and including Medium Duty Commercial trucks. Additionally, in February, 2013 AMP Holding Inc. formed a new wholly owned subsidiary, AMP Trucks Inc., an Indiana corporation. On March 13, 2013 AMP Trucks Inc. closed on the acquisition of an asset purchase of Workhorse Custom Chassis, LLC. The assets included in this transaction include: The Workhorse brand, access to the dealer network of 440 dealers nationwide, intellectual property, and all physical assets which include the approximately 250,000 sq. ft. of facilities on 48 acres of land in Union City, Indiana. This acquisition allows AMP Holding Inc. the position as a medium duty OEM capable of producing new chassis with electric, propane, compressed natural gas, and hybrid configurations, as well as gasoline drive systems. 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 experimental vehicles.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(Unaudited)

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.

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 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. Obtaining such working capital is not assured.

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 is stated at the lower of cost or market.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(Unaudited)

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:

Buildings:	15 - 30 years
Leasehold improvements:	7 years
Software:	3 - 6 years
Equipment:	5 years
Vehicles and prototypes:	3 - 5 years

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 $35,000 and $35,000 for the three months ended March 31, 2013 and 2012, respectively, and $1,301,000 for the period from inception to March 31, 2013 consisting primarily of consulting fees and travel and related expenses for attendance at car shows and industry expositions.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(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 March 31, 2013 cumulative deferred tax assets of approximately $5,236,000 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, net operating losses of approximately $3,900,000 are available for carryover to be used against taxable income generated through 2032, and net operating losses of approximately $1,200,000 are available for carryover to be used against taxable income generated through 2033. 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 2009 - 2011. The Company's policy with regard to interest and penalties is to recognize interest through interest expense and penalties through other expense. No interest or penalties with regard to income tax filings were incurred in 2013 or 2012, or since the period of inception, February 20, 2007. 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 $495,000 and $641,000 for the three months ended March 31, 2013, and 2012, respectively, and $12,186,000 for the period from inception to March 31, 2013, 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, 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.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(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 2012 for $50,000 and 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.

On May 10, 2013, the Company entered into a subscription agreement with various accredited investors pursuant to which the investors purchased 2,575,000 shares of the Company’s common stock at a cost basis of $0.20 per share, for a purchase price of $515,000, together with common stock purchase warrants to acquire 1,287,500 shares of common stock at $0.40 per share for a period of three years.

On May 10, 2013 the Company settled outstanding invoices for consulting services totaling $121,000 by issuing 500,000 shares of common stock.

2.	ACQUISITION

On March 13, 2013 the Company acquired the operating assets of Workhorse Custom Chassis, LLC, an unrelated company located in Union City, Indiana. The following summarizes the consideration paid, and the components of the purchase price and the related allocation of assets acquired and liabilities assumed.

Consideration
Cash at closing	$	2,750,000
Secured debenture		2,250,000
	$	5,000,000

Assets acquired
Inventory	$	400,000
Equipment		500,000
Land		300,000
Buildings		3,800,000
	$	5,000,000

Valuation methods used for the identifiable assets acquired in the acquisition make use of fair value measurements based on unobservable inputs and reliance on management’s assumptions that similar market participants would use in pricing the assets. As such, the fair value measurements represent a Level 3 input.

The secured debenture is payable to the seller in March 2016 and accrues interest annually at 10%.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(Unaudited)

3.	LONG-TERM DEBT

	March 31,		December 31,
Long-term debt consists of the following:	2013		2012

Secured debenture payable to Workhorse Custom Chassis, LLC, due
March 2016 plus interest at 10%. The debenture is secured by the real
estate and related assets of the plant located in Union City, Indiana
with a net book value of $5,000,000 at March 31, 2013	$	2,250,000	$	-

Note payable, 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 with a net book value of $16,160 at March 31, 2013		17,081		18,761

Note payable, vendor due in monthly installments of $439 including interest
at 8.00% with the final payment due December 2014. The note is secured
by equipment with a net book value of $10,953 at March 31, 2013		8,586		10,545

Note payable to the City of Loveland, due in annual installments of $10,241
including interest with the final payment due October 2016. Interest rate
amended to 8.00%. The note is unsecured and contains restrictions on
the use of proceeds.		50,000		50,000

Note payable, vendor due in monthly installments of $5,000 for the first half
of 2013, escalating to final payment of $43,736 in March 2014. Note is
noninterest bearing and is unsecured.		273,736		281,236

Note payable, vendor due in monthly installments of $2,000 plus interest
at 4% for the first half of 2013, escalating to final payment of $18,461 plus
interest at 4% in December 2014. Note is unsecured.		226,400		232,400
		2,825,803		592,942
Less current portion		377,171		230,756
Long term debt	$	2,448,632	$	362,186

Aggregate maturities of long-term debt are as follows:

2013	$	211,934
2014		338,883
2015		14,822
2016		2,260,164
	$	2,825,803

The note payable to the City of Loveland contains job creation incentives whereby each annual payment may be forgiven by the City upon the Company meeting minimum job creation benchmarks. This loan agreement amended the incentives to 30 full time employees within the City of Loveland with payroll totaling $135,000 by July 31, 2013 and 40 employees with payroll totaling $175,000 by July 31, 2014, continuing with an average of 40 employees with payroll totaling $175,000 thereafter. The proceeds from this loan were to be used for qualified disbursements only, and the Company has been notified it did not meet the requirements for qualified disbursements and for forgiveness of the 2012 principal and interest payment, which is past due. In 2013 the Company is required to make payments to an escrow account totaling $22,900.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(Unaudited)

4.	CONVERTIBLE DEBENTURES

From January 6, 2012 through August 3, 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 $1,939,250 (the "2012 Notes"). The Company received the proceeds in connection with these financings between January 6, 2012 and August 3, 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 were to mature one year from their respective effective dates (the "Maturity Dates") and interest associated with the 2012 Notes was 10% per annum, payable on the Maturity Dates. In November 2012, the Company entered into a Note and Warrant Amendment and Conversion Agreement whereby the holders and the 2012 Investors converted all principal and interest under the 2012 Notes into 10,227,070 shares of common stock. Further, the exercise price of the 2012 Warrants was reduced to $0.25 per share.

In addition to the 2012 Notes, the 2012 Investors also received common stock purchase warrants (the “2012 Warrants”) to acquire 1,939,250 shares of common stock of the Company. The 2012 Warrants are exercisable for three years at an exercise price of $0.50 per share, reduced to $0.25 per share as noted above. 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 $91,493 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 was amortized as interest expense during the period that the 2012 Notes were outstanding. Amortization charged to the Statement of Operations is $91,493 for the year ended December 31, 2012.

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.

5.	SHAREHOLDER AND RELATED PARTY 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 November 30, 2013.

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.

In 2012 this shareholder also advanced $33,600 to the Company for working capital needs, of which $18,600 was repaid during 2012. In consideration of the $15,000 remaining advance, the Company issued a promissory note with interest at 10% per annum due October 5, 2013.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(Unaudited)

During 2012 shareholders and related parties advanced $500,000 to the Company for working capital needs. In consideration of such advances, the Company issued promissory notes with interest at 10% per annum due October 16, 2013. The notes are unsecured and require the Company to designate part of the proceeds of financing in excess of $2,000,000 to be used for repayment of these notes. The Company is in violation of this covenant in 2013 as financing in excess of $2,000,000 has occurred but repayment of these notes has not occurred.

6.	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 currently $12,231 and increase 3% in October of each year. Prepaid expenses and deposits include a security deposit equal to $12,275. Aggregate maturities of lease obligations are as follows:

2013	$	111,182
2014		152,312
2015		156,881
2016		161,588
2017		166,436
2018		127,614
	$	876,013

The Company also leased office space for approximately $1,000 per month on a month to month agreement through May 2012 and two apartments for approximately $2,200 per month on month to month agreements through January 2012. 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 for the three months ended March 31, 2013 and 2012 was $39,694 and $38,347, respectively, and $491,692 for the period from inception to March 31, 2013.

7.	STOCK BASED COMPENSATION

Options to directors, officers and employees

The Company maintains, as adopted by the board of directors, the 2013 Incentive Stock Plan, the 2012 Incentive Stock Plan, the 2011 Incentive Stock Plan and the 2010 Stock Incentive Plan (the plans) providing for the issuance of up to 11,000,000 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 two years for options with a five or three year term and after one year for options with a two year term.

In addition to the plans, 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.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(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		2,025,000			0.13		0.05		40
Exercised		-			-		-		-
Forfeited or expired		(2,629,750	)		0.58		0.28		48
Outstanding at December 31, 2012		7,730,500		$	0.48	$	0.25		44
Exercisable at December 31, 2012		6,080,000		$	0.54	$	0.29		46
Granted		1,100,000			0.29		0.13		60
Exercised		-			-		-		-
Forfeited or expired		(8,500	)		0.11		0.04		32
Outstanding at March 31, 2013		8,822,000		$	0.45	$	0.23		43
Exercisable at March 31, 2013		6,203,500		$	0.54	$	0.29		43

The Company recorded $3,981, $100,207 and $1,790,841 compensation expense for stock options to directors, officers and employees for the three months ended March 31, 2013, 2012 and the period from inception (February 20, 2007) to March 31, 2013, respectively. As of March 31, 2013, unrecognized compensation expense of $279,342 is related to non-vested options granted to directors, officers and employees which is anticipated to be recognized over the next 48 months, commensurate with the vesting schedules.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(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		150,000			0.11		0.04		36
Exercised		-			-		-		-
Forfeited or expired		(370,000	)		0.83		0.28		11
Outstanding at December 31, 2012		660,000		$	0.45	$	0.15		14
Exercisable at December 31, 2012		561,000		$	0.50	$	0.17		10
Granted		50,000			0.25		0.11		60
Exercised		-			-		-		-
Forfeited or expired		-			-		-		-
Outstanding at March 31, 2013		710,000		$	0.43	$	0.15		14
Exercisable at March 31, 2013		573,375		$	0.50	$	0.17		8

The Company recorded $460, $19,300 and $96,454 compensation expense for stock options to consultants for the three months ended March 31, 2013, 2012 and the period from inception (February 20, 2007) to March 31, 2013, respectively. As of March 31, 2013, unrecognized compensation expense of $8,657 is related to non-vested options granted to consultants which is anticipated to be recognized over the next 36 months, commensurate with the vesting schedules.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(Unaudited)

Warrants to accredited investors

From December 2010 through December 2011, common stock sold by the Company 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. In November 2012, the purchase warrants were modified to change the exercise period from two years to three years. The $112 cost of this modification is included in stock based compensation expense for the year ended December 31, 2012.

From January 2012 through August 2012, the 2012 Investors received 2012 Warrants to acquire common stock of the Company. The 2012 Warrants are exercisable for three years at an exercise price of $0.50. In November 2012, the Company entered into a Note and Warrant Amendment and Conversion Agreement whereby the holders and the 2012 Investors converted all principal and interest under the 2012 Notes into shares of common stock. Further, the exercise price of the 2012 Warrants was reduced to $0.25 per share. The $20,795 cost of the reduction in the exercise price for accredited investors is included in stock based compensation expense for the year ended December 31, 2012.

From January 2013 through March 2013, the 2013 Investors received 2013 Warrants to acquire common stock of the Company. The 2013 Warrants are exercisable for three years at an exercise price of $0.40.

The above 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.

Table of Contents

AMP Holding Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial Statements

For the Three Months Ended March 31, 2013 and 2012

and for the Period From Inception,

February 20, 2007 to March 31, 2013

(Unaudited)

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		1,450,000			0.50		0.06		36
Modified warrants prior to modifications		(7,191,225	)		0.74		0.10		10
Modified warrants after modifications		7,191,225			0.69		0.10		20
Exercised		-			-		-		-
Forfeited or expired		-			-		-		-
Outstanding at December 31, 2012		7,191,225		$	0.69	$	0.10		19
Exercisable at December 31, 2012		7,191,225		$	0.69	$	0.10		19
Granted		9,462,500			0.40		0.04		36
Exercised		-			-		-		-
Forfeited or expired		-			-		-		-
Outstanding at March 31, 2013		16,653,725		$	0.52	$	0.06		27
Exercisable at March 31, 2013		16,653,725		$	0.52	$	0.06		27

The Company recorded $343,175, $0 and $997,256 compensation expense for stock warrants to accredited investors for the three months ended March 31, 2013, 2012 and the period from inception (February 20, 2007) to March 31, 2013, respectively. There is no unrecognized compensation expense for these warrants because they are fully vested at date of grant.

Table of Contents

AMP Holding Inc. and Subsidiaries