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 September 30, 2013

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    
Accelerated filer    
Non-accelerated filer    
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
81,537,358
(Class)
(Outstanding at November 19, 2013)
 

 
TABLE OF CONTENTS
 
 
3
     
3
     
 
4
     
 
5
     
 
6
     
 
7
     
 
8
     
21
     
25
     
25
     
27
     
27
     
27
     
32
     
33
     
33
     
33
     
34
     
 
35

 
 

 
 
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheets
September 30, 2013 and December 31, 2012

Assets
  
September 30,
2013
(Unaudited)
    
December 31,
2012
  
             
Current assets:
            
       Cash and cash equivalents
   $ 7,463     $ 39,819  
       Inventory
     393,752       41,002  
       Prepaid expenses and deposits
     93,904       13,025  
      495,119       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
     670,183       170,120  
       Vehicles and prototypes
     164,959       164,959  
      4,982,088       382,025  
       Less accumulated depreciation
     473,333       255,178  
      4,508,755       126,847  
                 
    $ 5,003,874     $ 220,693  
                 
Liabilities and Stockholders' Equity (Deficit)
                
                 
Current liabilities:
                
       Accounts payable
   $ 1,409,632     $ 1,253,228  
       Accounts payable, related parties
     376,537       336,556  
       Customer deposits
     202,500       60,000  
       Shareholder advances
     1,213,000       558,000  
       Current portion of long-term debt
     392,542       230,756  
      3,594,211       2,438,540  
                 
Long-term debt
     2,346,516       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 September 30, 2013
                
         and December 31, 2012
     -       -  
       Common stock, par value of $.001 per share 250,000,000 shares authorized,
                
         81,474,200 shares issued and outstanding at September 30, 2013 and
                
         55,955,463 shares issued and outstanding at December 31, 2012
     81,474       55,955  
       Additional paid-in capital
     20,192,304       14,956,547  
       Stock based compensation
     4,951,902       3,778,723  
       Accumulated deficit during the development stage
     (26,162,533 )     (21,371,258 )
      (936,853 )     (2,580,033 )
                 
    $ 5,003,874     $ 220,693  
 
See accompanying notes to consolidated financial statements.

 
 
3
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 2013
 
 
                            Since Date  
                            of Inception,  
   
 
           February 20,  
   
Three Months Ended
     Nine Months Ended     2007 to  
    September 30,     September 30,      September 30,     September 30,     September 30,  
    2013     2012     2013     2012     2013  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
                               
Sales
   $ 177,500     $ -     $ 177,500     $ 222,098     $ 780,340  
                                         
Expenses:
                                        
Payroll and payroll taxes
     422,809       461,399       1,154,669       1,410,544       8,481,515  
Employee benefits
     22,481       32,104       91,920       118,964       745,163  
Stock based compensation
     32,652       36,951       1,173,179       256,877       4,969,642  
Batteries and motors and supplies
     79,774       49,692       305,590       173,199       3,041,146  
Legal and professional
     57,877       471,320       342,609       625,478       2,483,363  
Advertising
     5,419       26,062       47,182       84,480       1,313,562  
Consulting
     219,347       (21,663 )     894,518       52,805       1,997,923  
Travel and entertainment
     38,773       26,120       84,005       75,026       568,709  
Rent
     34,841       34,903       111,229       111,875       563,227  
Insurance
     44,412       45,275       109,515       83,028       495,134  
Vehicles, development and testing
     -       -       35,600       57,786       357,801  
Depreciation
     101,491       15,573       218,155       48,458       511,162  
Interest and bank fees
     75,034       70,493       179,029       156,364       436,356  
Engineering, temporary labor
     4,635       903       8,944       1,773       260,230  
Facilities, repairs & maintenance
     41,680       5,901       121,075       18,616       325,658  
Utilities
     37,956       7,296       82,931       26,159       217,886  
Loss on sale of assets
     -       14,452       -       14,452       27,544  
Other
     3,483       6,564       8,625       22,318       146,852  
      1,222,664       1,283,345       4,968,775       3,338,202       26,942,873  
                                         
  Net loss during the development stage
   $ (1,045,164 )   $ (1,283,345 )   $ (4,791,275 )   $ (3,116,104 )   $ (26,162,533 )
                                         
Basic and diluted loss per share
   $ (0.01 )   $ (0.03 )   $ (0.07 )   $ (0.08 )   $ (0.85 )
                                         
Weighted average number of common
                                        
   shares outstanding
     80,655,861       39,570,618       73,164,046       39,082,846       30,755,976  
 
See accompanying notes to consolidated financial statements.
 
 
4
 
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
From Inception, February 20, 2007
to September 30, 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
     21,408,125       21,408       -       -       4,279,192       -       -       4,300,600  
Stock options and warrants exercised
     18,764       19       -       -       1,142       -       -       1,161  
Conversion of convertible note
     500,000       500       -       -       99,500       -       -       100,000  
Conversion of account payable
     3,591,848       3,592       -       -       855,923       -       -       859,515  
Share based compensation for the
                                                                
nine months ended September 30, 2013
     -       -       -       -       -       1,173,179       -       1,173,179  
Net loss from operations for the
                                                                
nine months ended September 30, 2013
     -       -       -       -       -       -       (4,791,275 )     (4,791,275 )
      81,474,200     $ 81,474       -     $ -     $ 20,192,304     $ 4,951,902     $ (26,162,533 )   $ (936,853 )
 
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, $126,000, $119,075, $11,750 and $155,000 were accepted as consideration for issuance of common stock in March, May, June, July and September 2013, respectively.
  
Legal services valued at $40,000, $15,000, $5,000 and $5000 were accepted as consideration for issuance of common stock in March, June, July and August 2013, respectively.
  
Rent for July, August, September 2013 and pre-paid rent for October, November, December 2013 valued at $80,190 was accepted as consideration for issuance of common stock.
  
 
See accompanying notes to consolidated financial statements.
 
 
AMP Holding Inc. and Susidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 2013
 
 
                           
Since Date
  
                            of Inception,  
                            February 20,  
   
Three Months Ended
    
Nine Months Ended
     2007 to  
    September 30, 2013 (Unaudited)
 
     September 30, 2012 (Unaudited)
 
     September 30, 2013 (Unaudited)
 
  
September 30,
2012
(Unaudited)
    
September 30,
2013
(Unaudited)
  
                               
Cash flows from operating activities:
                              
Net loss during the development stage
   $ (1,045,164 )   $ (1,283,345 )   $ (4,791,275 )   $ (3,116,104 )   $ (26,162,533 )
Adjustments to reconcile net loss from operations
                                  
to cash used by operations:
                                        
  Depreciation
     101,491       15,573       218,155       48,458       511,162  
  Loss on sale of assets
     -       14,452       -       14,452       27,544  
  Stock based compensation
     32,652       36,951       1,173,179       256,877       4,969,642  
  Interest expense on convertible debentures
     -       -       -       -       106,164  
  Amortized discount on convertible debentures
     -       23,243       -       55,013       91,493  
  Rent and Legal, consulting and investment services
     256,940       415,000       859,515       475,000       1,769,515  
Effects of changes in operating assets and liabilities:
                                
    Inventory
     47,250       40,000       47,250       40,000       6,248  
    Prepaid expenses and deposits
     (36,103 )     26,310       (80,879 )     38,185       (93,904 )
    Accounts payable
     64,324       178,920       156,404       379,191       1,923,268  
    Accounts payable, related parties
     25,187       15,668       39,981       97,932       376,537  
    Customer deposits
     (177,500 )     -       142,500       -       202,500  
                                         
      Net cash used by operations
     (730,923 )     (517,228 )     (2,235,170 )     (1,710,996 )     (16,272,364 )
                                         
Cash flows from investing activities:
                                        
  Initial purchase of AMP Trucks assets
     -       -       (5,000,000 )     -       (5,000,000 )
  Capital expenditures
     (63 )     -       (63 )     (28,753 )     (376,713 )
  Proceeds on sale of assets
     -       -       -       -       38,900  
                                         
    Net cash used by investing activities
     (63 )     -       (5,000,063 )     (28,753 )     (5,337,813 )
                                         
Cash flows from financing activities:
                                        
  Proceeds from debentures
     -       500,000       -       1,939,250       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
     (62,895 )     (1,635 )     (103,884 )     (4,841 )     (122,942 )
  Shareholder advances, net of repayments
     655,000               655,000       (269,000 )     1,213,000  
  Issuance of common and preferred stock
     -       -       4,301,761       -       16,178,332  
                                         
      Net cash provided by financing activities
     592,105       498,365       7,202,877       1,665,409       21,617,640  
                                         
Change in cash and cash equivalents
     (138,881 )     (18,863 )     (32,356 )     (74,340 )     7,463  
Cash and cash equivalents at inception, February 20, 2007
                       -  
Cash and cash equivalents at December 31, 2011
                       89,488          
Cash and cash equivalents at June 30, 2012
       34,011                          
Cash and cash equivalents at September 30, 2012
     $ 15,148             $ 15,148          
Cash and cash equivalents at December 31, 2012
               39,819                  
Cash and cash equivalents at June 30, 2013
     146,344                                  
Cash and cash equivalents at September 30, 2013
   $ 7,463             $ 7,463             $ 7,463  
 
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 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, $126,000, $119,075, $11,750 and $155,000 were accepted as consideration for issuance of common stock in March, May, June, July and September 2013, respectively.
  
Legal services valued at $40,000, $15,000, $5,000 and $5,000 were accepted as consideration for issuance of common stock in March, June, July and August 2013, respectively.
  
Rent in July, August and September 2013 and pre-paid rent for October, November and December 2013 valued at $80,190 was accepted as consideration for issuance of common stock.
  
 
 
 
 
See accompanying notes to consolidated financial statements.
 
6
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
 Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 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 vehicles 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.

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.
 
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
 Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 2013
(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 2012 and 2013 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.

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
 

 
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
 Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 2013
(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 $5,419and $26,062  for the three months ended September 30, 2013 and 2012, respectively, and $47,182 and $84,480 for the nine months ended September 30, 2013 and 2012, respectively, and $ 1,313,562 for the period from inception to September 30, 2013  consisting primarily of consulting fees and travel and related expenses for attendance at car shows and industry expositions.

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 September 30, 2013 cumulative deferred tax assets of approximately $6,052,000 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 $3,600,000 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.
 
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
 Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 2013
(Unaudited)

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 2010 - 2012.  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   consisting of payroll, payroll taxes, consulting, motors, batteries, supplies, 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.

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.
 

 
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
 Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 2013
(Unaudited)
 
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.
 
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.
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 2013
(Unaudited)

3.  
 LONG-TERM DEBT
 
 
  
September 30,
     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 $4,423,335 at September 30, 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 $12,818 at September 30, 2013
     13,668       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 $9,522 at September 30, 2013
     6,254       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.
     213,736       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.
     205,400       232,400  
      2,739,058       592,942  
Less current portion
     392,542       230,756  
                 
Long term debt
   $ 2,346,516     $ 362,186  
                 
 
Aggregate maturities of long-term debt are as follows:
 
2013
   $ 125,189  
2014
     338,883  
2015
     14,822  
2016
     2,260,164  
    $ 2,739,058  
 

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 October 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 made payments to an escrow account totaling $22,900.
 
 
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 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.

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.

During 2013 shareholders and related parties advanced $655,000 to the Company for working capital needs.

 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 2013
(Unaudited)
 
 
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 $12,598 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
   $ 37,795  
2014
     152,312  
2015
     156,881  
2016
     161,588  
2017
     166,436  
2018
     127,614  
    $ 802,626  
 
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 September 30, 2013 and 2012 was $34,841 and $ 34,903, respectively, $111,229  and $111,875, for the nine months ended September 30, 2013 and 2012, respectively, and $563,227 for the period from inception to September 30, 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.
 
 
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 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
     -       -       -       -  
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       40  
Forfeited
     -       -       -       -  
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
     (1,315,375 )     0.61       0.27       40  
Expired
     (1,314,375 )     0.55       0.29       51  
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
     1,400,000       0.31       0.13       60  
Exercised
     (21,126 )     0.11       0.04       29  
Forfeited
     -       -       -       -  
Expired
     (308,500 )     0.68       0.19       -  
Outstanding at September 30, 2013
     8,800,874     $ 0.44     $ 0.23       39  
Exercisable at September 30, 2013
     6,670,937     $ 0.51     $ 0.27       38  

The Company recorded $508,418, $325,673, $855,246, $588,201 and $2,295,278 compensation expense for stock options to directors, officers and employees for the nine months ended September 30, 2013, for the years ended 2012, 2011, and 2010, and for the period from inception (February 20, 2007) to September 30, 2013, respectively.  As of September 30, 2013, unrecognized compensation expense of $202,248 is related to non-vested options granted to directors, officers and employees which is anticipated to be recognized over the next 44 months, commensurate with the vesting schedules.
 
 
AMP Holding Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013 and 2012
and for the Period From Inception,
February 20, 2007 to September 30, 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.