UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


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


For the quarterly period ended March 31, 2014


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


For the transition period from _________________ to _________________


Commission File No.: 000-30291


HII TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware

        03-0453686

(State or other jurisdiction of

incorporation or organization)

          (I.R.S. Employer

          Identification No.)

710 North Post Oak Road, Suite 400

Houston, Texas 77024

 (Address of principal executive offices)

Issuer’s telephone number:  (713) 821-3157


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

Indicate by check mark whether the registrant (1) 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 X No ___


Indicate by check mark whether the registrant is a large 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 [  ] (Do not check if a smaller reporting company)

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 


As of May 14, 2014, 49,118,556 shares of our common stock were outstanding.




1



HII TECHNOLOGIES, INC.


FORM 10-Q


March 31, 2014


TABLE OF CONTENTS


 

Page

  

PART I-- FINANCIAL INFORMATION

 

  

 

 

 

  

Item 1.

Financial Statements (unaudited)

3

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

16

  

Item 4

Controls and Procedures

16

  

 

 

 

  

PART II-- OTHER INFORMATION

 

  

 

 

 

  

Item 1

Legal Proceedings

17

  

Item 1A

Risk Factors

17

  

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

17

  

Item 3.

Default Upon Senior Securities

17

  

Item 4.

Mine Safety Disclosures

17

  

Item 5.

Other Information

17

  

Item 6.

Exhibits

18

  

 

 

 

  

SIGNATURES

 

  




2



ITEM 1 –FINANCIAL STATEMENTS (UNAUDITED)


HII TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

 

March 31

 

December 31

 

 

 

2014

 

2013

 

 

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 $              56,747

 

 $          866,035

 

Accounts receivable, net of allowance of $79,116 and $79,116

       6,493,584

 

     3,708,012

 

Note receivable

        291,790

 

        294,755

 

Current portion of deferred financing costs

       33,818

 

        33,541

 

Prepaid expense and other current assets

         162,432

 

       111,147

 

 

Total current assets

     7,038,371

 

    5,013,490

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $233,344 and $133,081

       3,168,675

 

     2,076,512

Deposits

          33,960

 

         33,960

Deferred financing costs, net of current portion

            4,980

 

        19,949

Intangible assets, net of accumulated amortization of $20,138 and $0

        576,862

 

       227,000

Goodwill

 

      2,852,107

 

    2,852,107

 

 

Total assets

 $        13,674,955

 

 $     10,223,018

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities:

 

 

 

 

Accounts payable

 $          4,635,907

 

 $       3,421,153

 

Accounts payable and other liabilities, related parties

         233,000

 

        158,000

 

Accrued expenses and other liabilities

     1,387,512

 

         703,302

 

Line of credit

      3,688,134

 

    2,678,992

 

Current portion of notes payable - related parties

          515,000

 

        545,926

 

Current portion of unsecured notes payable

          500,000

 

                  -

 

Current portion of secured notes payable

         192,669

 

         85,000

 

 

Total current liabilities

     11,152,222

 

    7,592,373

 

 

 

 

 

 

Long term liabilities:

 

 

 

 

Notes payable - unsecured

      1,000,000

 

       1,000,000

 

Notes payable - secured

         137,604

 

        158,855

 

Notes payable - related parties net of current portion

          457,208

 

        585,958

 

 

Total liabilities

     12,747,034

 

     9,337,186

 

 

 

 

 

 

Commitments and contingencies

                      -

 

                     -

Stockholders' equity

 

 

 

 

Preferred stock, $.001 par value, 10,000,000 shares authorized,

 

 

 

 

   

no shares issued or outstanding

                         -

 

                     -

 

Common stock, $.001 par value, 250,000,000 shares authorized,

 

 

 

 

 

48,591,957 and 48,424,712 shares issued and outstanding

                48,591

 

           48,424

 

Additional paid-in-capital

       28,187,796

 

     28,121,023

 

Accumulated deficit

     (27,308,466)

 

    (27,283,615)

 

 

Total stockholders' equity

           927,921

 

          885,832

 

 

Total liabilities and stockholders' equity

$      13,674,955

 

$     10,223,018


See accompanying notes to unaudited consolidated financial statements.



3




HII TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2014 and 2013

(unaudited)

 

 

 

March 31,

 

December 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

REVENUES

$               7,505,061

 

$            2,609,773

 

 

 

 

 

 

COST OF REVENUES

                5,383,228

 

            2,077,481

 

 

 

 

 

 

GROSS PROFIT

               2,121,833

 

               532,292

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

Selling, general and administrative

                  1,987,070

 

                550,731

 

 

 

 

 

 

 

Total operating expenses

                  1,987,070

 

                 550,731

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

                     134,763

 

                (18,439)

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

Interest expense

                (139,810)

 

               (78,451)

 

 

 

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

                    (5,047)

 

                (96,890)

 

 

 

 

 

 

PROVISION FOR INCOME TAXES

                     (19,804)

 

              (17,499)

 

 

 

 

 

 

NET LOSS

$                  (24,851)

 

$             (114,389)

 

 

 

 

 

 

Basic and diluted net loss per share

$                              -

 

$                           -

 

 

 

 

 

 

Weighted average shares outstanding-Basic and diluted

            48,558,106

 

                43,741,294


See accompanying notes to unaudited consolidated financial statements.






4




HII TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'  EQUITY

For the three months ended March 31, 2014

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Common Stock

 

Paid-In

 

Accumulated

 

 

 

Shares

Par

 

Capital

 

Deficit

 

Total

 

 

 

 

 

 

 

 

 

Balances at December 31, 2013

  48,424,712

$      48,424

 

$     28,121,023

 

$ (27,283,615)

 

$    885,832

 

 

 

 

 

 

 

 

 

Warrants exercised

         50,000

                50

 

              12,450

 

                    -

 

       12,500

Warrants exercised using cashless provisions

      117,245

              117

 

                (117)

 

                   -

 

                -

Stock options issued for services

                 -

                 -

 

             54,440

 

                   -

 

      54,440

Net loss

                -

                 -

 

                        -

 

       (24,851)

 

    (24,851)

 

 

 

 

 

 

 

 

 

Balances at March 31, 2014

   48,591,957

$      48,591

 

$      28,187,796

 

$ (27,308,466)

 

$    927,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements






5




HII TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2014 and 2013

(unaudited)

 

 

 

 

 

 

 

 

 

March 31,

 

March 31,

 

 

 

 

2014

 

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

Net loss

$          (24,851)

 

$        (114,389)

 

Adjustments to reconcile net loss to net

 

 

 

 

 

cash used in operating activities:

 

 

 

 

 

Amortization of note payable discount

                        -

 

                 36,291

 

 

Amortization of deferred finance costs

                 18,859

 

                        -

 

 

Stock-based compensation

                 54,440

 

                   1,160

 

 

Depreciation and amortization

               123,580

 

                 29,374

 

 

Loss on asset disposal

                   8,275

 

                          -

 

 

Changes in:

 

 

 

 

 

 

Accounts receivable

          (2,785,573)

 

          (1,009,667)

 

 

 

Prepaid expense and other current assets

               (48,857)

 

               (12,381)

 

 

 

Other assets

                        -

 

                   2,852

 

 

 

Accounts payable

            1,214,754

 

               676,368

 

 

 

Accounts payable and other liabilities - related parties

                 75,000

 

                 35,000

 

 

 

Accrued expenses and other liabilities

               684,210

 

               171,951

 

Net cash used in operating activities

             (680,163)

 

             (183,441)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

Cash received from the sale of property and equipment

                        -

 

                 42,776

 

Cash paid for purchase of property and equipment

          (1,086,222)

 

               (19,087)

 

Net cash provided by (used in) investing activities

          (1,086,222)

 

                 23,689

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

Proceeds from exercise of warrants

                 12,500

 

                 18,750

 

Proceeds from sale-leaseback transaction

                        -

 

                 87,375

 

Payments for deferred financing costs

                 (4,167)

 

                        -

 

Proceeds from notes payable

               130,000

 

                        -

 

Proceeds from line of credit, net

            1,009,142

 

                        -

 

Payments on notes payable

             (190,378)

 

             (173,334)

 

Net cash provided by (used in) financing activities

               957,097

 

               (67,209)

NET DECREASE IN CASH AND CASH

 

 

 

 

EQUIVALENTS

             (809,288)

 

             (226,961)

CASH AND CASH EQUIVALENTS, beginning of period

               866,035

 

               379,336

CASH AND CASH EQUIVALENTS, end of period

$            56,747

 

$         152,375

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

Cash paid for income taxes

$                      -

 

$                     -

 

Cash paid for interest

               115,634

 

                 22,616

Noncash investing and financing activities

 

 

 

 

Notes issued in consideration for property and equipment

               117,120

 

                        -

 

Notes issued in consideration for intangible assets

               370,000

 

                        -

 

Cashless exercise of warrants

                      117

 

                        -

 

Unpaid additions to property and equipment

                        -

 

                   4,200

 

Common stock issued for lease deposit

                        -

 

                 31,500


See accompanying notes to unaudited consolidated financial statements.




6




HII TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES


Basis of presentation


The accompanying unaudited interim consolidated financial statements of HII Technologies, Inc. (“we”, “our”, “HII” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2013 and 2012 contained in HII Technologies’ Form 10-K originally filed with the Securities and Exchange Commission on March 31, 2014.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the audited consolidated financial statements for years ended December 31, 2013 and 2012 as reported in the Company’s Form 10-K have been omitted.


Principles of consolidation


The consolidated financial statements include the accounts of HII and its wholly-owned subsidiaries KMHVC, Inc., a Texas corporation (dba “South Texas Power”, “KMHVC”), Aqua Handling of Texas, LLC, a Texas limited liability company (dba “AquaTex”) and Apache Energy Services, LLC, a Nevada limited liability company (dba’s “AES Water Solutions” and “AES Safety Services”, herein “AES”). Significant inter-company accounts and transactions have been eliminated.  


Reclassifications


Certain amounts in the consolidated financial statements of the prior year have been reclassified to conform to the presentation of the current year for comparative purposes.


NOTE 2 – INTANGIBLE ASSETS


Intangible assets consist of:


 

 

March 31, 2014

 

December 31, 2013

Technology license

 

$370,000

 

$             -

Customer relationships

 

227,000

 

227,000

 

 

597,000

 

227,000

 

 


 


Less – accumulated amortization

 

(20,138)

 

-

 

 

$576,862

 

$  227,000


On January 15, 2014, the Company’s wholly owned subsidiary, AES Water Services, entered into a sublicense agreement granting exclusive use of licensed water recycling technology and the associated water treatment platform unit.  AES paid a sublicense fee of $370,000, which fee was paid via issuance of a 10% promissory note by both the Company and AES. The note is due on July 15, 2014 and bears annual interest of 10%. The agreement remains in force on an exclusive basis for so long as AES Water Services or its designees continue to use the water recycling technology.  In addition, the sublicense will be terminated upon a default of the promissory note.



7




NOTE 3 – NOTES PAYABLE


On January 15, 2014, the Company, and its wholly owned subsidiary AES issued a promissory note in the amount of $370,000 to a single accredited investor. The note is due on July 15, 2014 and bears annual interest of 10%.  The note was issued as consideration to fund a technology licensing fee.


On February 17, 2014, the Company issued a promissory note in the amount of $130,000 to a single accredited investor. The note is due on July 15, 2014 and bears annual interest of 10%.  The proceeds were used for working capital and general corporate purposes.


On February 27, 2014, the Company’s wholly-owned subsidiary KMHVC entered into a Security Agreement –Conditional Sales Contract with a third-party equipment seller for the purchase of equipment.  KMHVC financed $117,120 of the purchase price and agreed to pay an additional $5,459 in finance charges (equal to 8.5% of the amount financed) for a total amount due under the conditional sales contract/promissory note of $122,579.  To secure payment, under this conditional sales contract/promissory note, KMHVC granted the equipment seller a purchase money security interest in the equipment sold.   The conditional sales contract/promissory note is payable in 12 equal monthly installments of $10,215 with the first payment due on March 27, 2014 and the last payment due on February 27, 2015. 

A summary of the activity in notes payable for the three months ended March 31, 2014 is shown below:


Notes payable - related parties

 

 

 

 

 

Balance at January 1, 2014

 

$        1,131,884

Less:  payments on notes payable

 

          (159,676)

 

 

            972,208

Less - current maturities, net - related parties

 

         (515,000)

Long-term notes payable, net March 31, 2014

 

$           457,208

 

 

 

Notes payable - third parties

 

 

Balance at January 1, 2014

 

$        1,243,855

Note issued in consideration for intangible assets

 

            370,000

Note issued in connection with purchase of property and equipment

 

            117,120

Unsecured promissory note

 

            130,000

Less:  payments on notes payable

 

           (30,702)

 

 

       1,830,273

Less - current maturities, net - third parties

 

        (692,669)

Long-term notes payable, net March 31, 2014

 

$        1,137,604


NOTE 4 – LINE OF CREDIT


On June 26, 2013, our wholly-owned subsidiaries, KMHVC, Inc. and AES (the “Borrower”) entered into a $2 million revolving accounts receivable financing facility with Rosenthal & Rosenthal (“Rosenthal”). The financing facility provides for the Borrower to have access to the lesser of (i) $2 million or (ii) 85% of Net Amount of Eligible Receivables (as defined in the financing agreement). The financing facility is paid for by the assignment of the Borrower’s accounts receivable to Rosenthal and is secured by the Borrower’s assets. The financing facility has an interest rate of 4.00% in excess of the prime rate reported by the Wall Street Journal per annum. The interest rate increases to the prime rate plus 7.00% for any borrowings in excess of 85% of the Borrower’s Net Amount of Eligible Receivables. In addition, the Borrower paid Rosenthal a facility fee of $30,000 on the closing and an annual fee of $20,000 and a monthly administration fee of $1,000 as well as monthly additional charges of not less than $2,000. The financing facility is for an initial term of two-years, expiring on June 30, 2015, and will renew on a year to year basis, unless terminated in accordance with the financing agreement. If the facility is terminated prior to the first anniversary, Borrower is obligated to pay Rosenthal a fee of $40,000 and if terminated after the first anniversary and prior to the second anniversary then Borrower shall pay a fee of $20,000. We guaranteed repayment of the line of credit, which guaranty is secured by our assets.


On November 20, 2013, our wholly-owned subsidiary, AquaTex entered into an Assumption Agreement with Rosenthal & Rosenthal, Inc. under which AquaTex became an additional borrower under the financing facility with Rosenthal.  In connection with AquaTex becoming an additional borrower under the facility, Rosenthal increased the maximum amount available under the facility to $3 million.  In January 2014, Rosenthal increased the maximum amount available under the facility to $4 million.  In April 2014, Rosenthal increased the maximum amount available under the facility to $5 million. Pursuant to the terms of the financing facility, the Company was required



8



to maintain at the end of each quarter, tangible net worth in an amount not less than negative $1,000,000 and working capital of not less than negative $2,000,000.


On March 26, 2014, the Company’s wholly-owned subsidiaries, AquaTex, AES, and STP entered into a waiver and amendment agreement with Rosenthal & Rosenthal, Inc. under which Rosenthal waived our non- compliance with the covenant to maintain working capital of not less than negative $2,000,000 for the period ended December 31, 2013.  Additionally, Section 6.10 of our Financing Agreement with Rosenthal & Rosenthal, Inc. was amended to provide that we are required to maintain working capital of not less than negative $4,500,000 in future periods.  The Company was not in compliance with the amended working capital covenant requiring to maintain a negative working capital of not less than $4,500,000 for the period ended March 31, 2014. The lender issued a waiver for this period on May 9, 2014. 


During the three months ended March 31, 2014, the Company made draws, net of expenses of $1,009,142.


The Company paid a total of $84,064 in various financing fees which will be amortized over the two year life of the line of credit.  A summary is shown below:


Balance at January 1, 2014

$  53,490

Add:  financing fees paid

     4,167

Less:  amortization of deferred financing costs

 (18,859)

 

   38,798

Less:  current maturities

  (33,818)

Long-term deferred financing costs

$   4,980


NOTE 5 – COMMON STOCK


On January 7, 2014, the Company issued 25,000 shares of its common stock to one of our directors upon exercise of outstanding warrants.  The Company received $6,250 in proceeds from the exercise of the warrant, which proceeds were used for working capital and general corporate purposes.


On January 23, 2014, we issued 59,210 shares of our common stock upon exercise of outstanding warrants.  The warrant was issued to purchase 125,000 shares and was exercised in full on a cashless basis and accordingly 65,790 shares were withheld by the Company at the market price of $0.57 per share less the exercise price of $0.30 per share to fund the exercise price.


On January 23, 2014, we issued 58,035 shares of our common stock upon exercise of outstanding warrants.  The warrant was issued to purchase 125,000 shares and was exercised in full on a cashless basis and accordingly 66,965 shares were withheld by the Company at the market price of $0.56 per share less the exercise price of $0.30 per share to fund the exercise price.


On January 30, 2014, the Company issued 25,000 shares of its common stock upon exercise of outstanding warrants. We received $6,250 in proceeds from the exercise of the warrant, which proceeds were used for working capital and general corporate purposes.


NOTE 6 – STOCK OPTIONS AND WARRANTS


Stock options


HII currently has two stock option plans: (a) the 2005 Stock Incentive Plan reserved 10,000,000 common shares and 8,615,140 stock options have been granted through March 31, 2014 and 153,000 options are outstanding at March 31, 2014, and (b) the 2012 Stock Incentive Plan reserved 10,000,000 common shares and 2,500,000 stock options have been granted through March 31, 2014 and 2,500,000 options are outstanding at March 31, 2014.


During the quarter ended March 31, 2014, no options were exercised or expired.


During the quarter ended March 31, 2014, 564,000 options were granted to employees and valued at $278,022 using the Black-Scholes pricing model. The 564,000 options vest over a period of 36 months.


Significant assumptions used in the valuation include the following:




9



Expected term                       7 years

Expected volatility              186.00%

Risk free interest rate             2.13%

Expected dividend yield         0.00%


During the quarter ended March 31, 2014, 100,000 options were granted to two directors and valued at $50,972 using the Black-Scholes pricing model.  The 100,000 options vest over a 12 month period.


Significant assumptions used in the valuation include the following:


Expected term                       5 years

Expected volatility              185.66%

Risk free interest rate             1.46%

Expected dividend yield         0.00%


Stock compensation expense recognized for the quarter ended March 31, 2014 related to the above options including those issued in the prior year amounted to $54,440. Unrecognized compensation cost as of March 31, 2014 of $406,474 is expected to be recognized over a period of 2.83 years.


Warrants


During the quarter ended March 31, 2014, 50,000 warrants were exercised for cash and 250,000 warrants were exercised on a cashless basis (see Note 5).  


A summary of activity in options and warrants is as follows:


 

 

 

 

Weighted

 

Weighted

 

Aggregate

 

 

 

Weighted

 

Weighted

 

Aggregate

 

 

 

 

Average

 

Average

 

Intrinsic

 

 

 

Average

 

Average

 

Intrinsic

 

 

Options

 

Remaining Life

 

Exercise Price

 

Value

 

Warrants

 

Remaining Life

 

Exercise Price

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2013

1,989,000

 

              4.19

 

$          0.17

 

$ 701,345

 

 1,528,000

 

                   2.51

 

$            0.14

 

$   590,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Granted

  664,000

 

 

 

            0.60

 

 

 

             -

 

 

 

 

 

 

 

Exercised

            -

 

 

 

 

 

 

 

  (300,000)

 

 

 

$            0.29

 

 

 

Forfeited and cancelled

            -

 

 

 

 

 

 

 

             -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at March 31, 2014

2,653,000

 

             4.59

 

$          0.28

 

$1,129,820

 

 1,228,000

 

                2.86

 

$            0.10

 

$   735,580


NOTE 7 – RELATED PARTY TRANSACTIONS


During the quarter ended March 31, 2014, a member of the Board provided cash advances to the Company totaling $75,000, resulting in an outstanding balance of $233,000 as of March 31, 2014.  The outstanding amount is included in accounts payable and other liabilities - related parties in the consolidated balance sheets.



NOTE 8 – SUBSEQUENT EVENTS


On April 25, 2014, the Company entered into an investor relations consulting agreement pursuant to which the Company agreed to issue 250,000 shares of its common stock to a consultant in consideration of services rendered under the agreement.   As of the date of this report, these shares have not been issued.


On April 30, 2014, the Company entered into stock purchase agreements with current noteholders under which the Company agreed to issue an aggregate of 276,599 shares of its common stock for an aggregate purchase price of $138,300.   Each of these purchasers are current noteholders of the Company and agreed to cancel indebtedness under their respective notes equal to their purchase price of the shares of common stock purchased by them.   As of the date of this report, these shares have not yet been issued.



10




ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The following discussion should be read in conjunction with the consolidated financial statements and notes. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management's expectations. Factors that could cause differences include, but are not limited to, continued reliance on external sources on financing, development risks for new products and services, commercialization delays and customer acceptance risks when introducing new products and services, fluctuations in market demand, pricing for raw materials as well as general conditions of the energy and oilfield marketplace.


Overview


HII Technologies, Inc. is a Houston, Texas based oilfield services company with operations in Texas, Oklahoma, Ohio and West Virginia focused on commercializing technologies and providing services in frac water management, safety services and portable power used by exploration and production (“E&P”) companies in the United States. We operate through our wholly-owned subsidiaries, Aqua Handling of Texas, LLC. (dba “AquaTex”), Apache Energy Services, LLC (dbas “AES Water Solutions” and “AES Safety Services”) and KMHVC, Inc. (dba “South Texas Power” and “STP”).  


The Company’s total frac water management services division does business as AquaTex and AES Water Solutions and provides total frac water management solutions associated with the needed millions of gallons of water typically used during hydraulic fracturing and completions of horizontally drilled oil and gas wells.  AES Safety Services is the Company’s oilfield safety consultancy providing experienced trained safety personnel such as contract safety engineers during oilfield operation from site preparation “rigging up” to drilling and completion for E&P customers. AES Safety Services provides the flexibility as outsourced safety consultants, training and inspection to its customers to move quickly in key locations.  The Company’s oilfield mobile power subsidiary does business as South Texas Power (STP) and operates a fleet of mobile generators, light towers and related equipment for in-field power rental where remote locations provide little or no existing electrical infrastructure.  


We currently employ 43 persons and extensively use independent contractor crews in connection with our field service work. Our executive offices are located at 710 North Post Oak Road, Suite 400, Houston, Texas 77024. Our telephone number is (713) 821-3157 and our Internet address is www.HIITinc.com.


Business Development – HII Technologies, Inc.


Organization


Our predecessor, Global Realty Management Group, Inc., or GRMG, was incorporated in the State of Florida in 1997. In June 2002, GRMG reincorporated under the laws of the State of Delaware from the State of Florida pursuant to a merger with a newly formed Delaware corporation. Under the terms of this reincorporation merger, GRMG changed its name from “Global Realty Management Group, Inc.” to “Excalibur Industries, Inc.” in connection with merging with the Excalibur operations. In October 2005, we changed our name from “Excalibur Industries, Inc.” to “Shumate Industries, Inc.” In February 2009, we changed our name from “Shumate Industries, Inc.” to “Hemiwedge Industries, Inc.” to emphasize and focus on our valve product technology after the October 2008 sale of assets related to our contract machining business. On August 31, 2011, we changed our name to “HII Technologies, Inc.”, which name change was required in connection with our May 2011 sale of our valve product technology and assets.


Acquisition of Apache Energy Services, LLC


On September 27, 2012, we consummated the acquisition (the “Acquisition”) of all of the outstanding membership interests of Apache Energy Services LLC (dba AES Water Solutions), a Nevada limited liability company (“AES” ) pursuant to the terms of a Securities Purchase Agreement dated September 26, 2012 by and among the us, AES and the members of AES (the “Purchase Agreement”). AES is a water transfer services company serving oilfield customers. The purchase price consisted of: (a) Cash in the amount of $290,000, of which $250,000 was paid on the closing date and the remaining $40,000 is payable (subject to a purchase price adjustment) in six equal installments, with the first installment payable on the first day of each month beginning the third month following the month in which the Closing occurs and each month thereafter until paid in full; (b) $1,300,000 in 5% subordinated secured promissory notes (the “Notes”), and (c) 6,500,000 shares (the “Shares”) of the registrant’s



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common stock. The Notes are payable in 12 equal quarterly installments beginning on February 1, 2013 and have a maturity date of November 1, 2015. The Notes are secured by the assets of the registrant and AES. The Shares are subject to a restricted stock agreement pursuant to which 500,000 shares will vest each quarter beginning December 31, 2012. The purchase agreement contains 2-year non-compete/non-solicitation provisions for Messrs. Mulliniks and Cox.


Launch of our Mobile Oilfield Power Business


In December 2012, we launched our mobile oilfield power solutions and services business, which is being conducted through our wholly-owned subsidiary, KMHVC, Inc. dba South Texas Power, or STP.


Launch of our Contract Safety Consultant Business


In January 2013, we launched AES Safety Services, our Safety division that offers contract safety engineers and professionals, safety training and onsite safety inspection services for E&P companies that prefer outsourcing their many of their safety programs or are required to by state regulation.


Acquisition of Aqua Handling of Texas, LLC.  


On November 12, 2013, we consummated the acquisition of all of the outstanding membership interests of Acquisition of Aqua Handling of Texas, LLC. (dba AquaTex) pursuant to the terms of a Securities Purchase Agreement dated November 11, 2013 by and among the registrant, AquaTex and the members of Aqua (the “Purchase Agreement”). The purchase price consisted of: (a) Cash in the amount of $300,000; (b) $500,000 in 5% subordinated secured promissory notes (the “Notes”), and (c) 1,443,696 shares of the registrant’s common stock ($500,000 value based on the trailing 30-day average of the registrant’s common stock).  The Notes are payable in 12 equal quarterly installments beginning on February 1, 2014 and have a maturity date of November 1, 2016.  The Notes are secured by the assets of the AquaTex.  In addition, there exists a working capital adjustment provision whereby we would be required pay the AquaTex members additional cash equal to the amount of any working capital of AquaTex at closing; provided, however, that in the event that AquaTex has negative working capital at closing, then the amount of such negative working capital will be offset against the notes issued to the former AquaTex members at closing   The purchase agreement contains 3-year non-compete/non-solicitation provisions for Messer’s George and Brewer, the former members of AquaTex.    


Results of Operations for the Three Months Ended March 31, 2014 and 2013


Revenues. Our revenues increased by $4,895,288, or approximately 188% to $7,505,061 for the three months ended March 31, 2014 from revenues of $2,609,773 for the three months ended March 31, 2013.  This increase was primarily attributable to the continued growth within our water division from AES Water Solutions and AquaTex (acquired in November 2013) frac water management services.  Additionally, increased revenues came from organic growth of AES Safety Services including its new spill remediation service line and the organic growth of STP’s business in mobile oilfield power. All three divisions of Water, Safety and Power benefitted from the continued activity levels of horizontal drilling and its related hydraulic fracing in the domestic U.S.  


Cost of Revenues. Cost of revenues increased by $3,305,747 or approximately 159%, to $5,383,228 for the three months ended March 31, 2014, or 72% of revenues, compared to cost of revenues of $2,077,481, or 80% of revenues for the three months ended March 31, 2013.  The cost of revenues during the three months ended March 31, 2014 were primarily the result of contract labor of $2,190,646, direct costs associated with the spill remediation line of $927,812, frac water pipe and pump rental of $820,587, equipment and truck rental of $549,083 and related fuel costs of $537,436.  The decrease in cost of revenues as a percentage of sales was the result of the additional revenues AquaTex, subsidiary which was acquired in November 2013, lower equipment rental costs, as well as higher revenues covering more fixed costs within cost of revenues particularly in the newer Safety and Power divisions. The cost of revenues during the three months ended March 31, 2013 were primarily the result of contract labor of $1,323,857, equipment rental of $367,287 and fuel for water pumps of $213,468.


Selling, general, and administrative. Selling, general and administrative expenses increased by $1,436,339, or approximately 261%, to $1,987,070, or approximately 26% of revenues, for the three months ended March 31, 2014, as compared to $550,731 or approximately 21% of revenues for the comparable period in 2013. The increase was primarily attributable to newly added employee compensation expense, consulting fees, the cost of public reporting and holding company expenses, as well as the testing and development costs related to water recycling technologies during 2014.



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Interest expense. Interest expense increased by $61,359, or approximately 78% to $139,810 in the three months ended March 31, 2014, from $78,451 for the comparable period in 2013.  The increase was attributable to the interest accrued on the accounts receivable financing facility and amortization of related deferred finance costs, promissory notes we issued in our September 2012 and October 2013 financings, as well as accrued interest on the notes issued in connection with our acquisition of AES Water Solutions in September 2012 and AquaTex in November 2013.


Net loss. Our net loss decreased by $89,538, or approximately 78% to $24,851 for the three months ended March 31, 2014 from a  net loss of $114,389 for the comparable period in 2013. The loss for the three months ended March 31, 2014 included non-cash charges in connection with the issuance of share-based awards of $54,440 and the amortization of deferred financing costs of $18,859.  In addition the Company incurred $86,950 in expenses from the testing and development costs related to water recycling technologies. The loss during the three months ended March 31, 2013 was primarily attributable to the acquisition expenses related to the purchase of AES Water Solutions and the disposal of obsolete assets.  


Liquidity and Capital Resources


We have financed our operations, acquisitions, debt service, and capital requirements through cash flows generated from operations, debt financing, loans from officers, and issuance of equity securities.  We had cash of $56,747 and a working capital deficit of $4,113,851 as of March 31, 2014 as compared to cash of $866,035 and a working capital deficit of $2,578,883 as of December 31, 2013.


Net cash used in operating activities for the three months ended March 31, 2014 was $680,163 resulting primarily from our net loss of $24,851 and increases in accounts receivable of $2,785,573 and prepaid expenses of $48,857, which amounts were offset by the increases in accounts payable of $1,214,754, accounts payable-related parties of $75,000 and accrued expenses of $684,210 and adjustments in non-cash items including $54,440 in non-cash stock for services, $123,580 in depreciation and amortization, $8,275 in loss on asset disposal and $18,859 in amortization of deferred finance costs. By comparison, net cash used in operating activities for the three months ended March 31, 2013 was $183,441 resulting primarily from our net loss of $114,389 which was offset by an increase in accounts payable and accrued expenses of $883,319 and an increase in accounts receivable and prepaid expenses of $1,022,048.


Net cash used in investing activities for the three months ended March 31, 2014 was $1,086,222 resulting from our acquisition of assets. By comparison, net cash provided by investing activities for the three months ended March 31, 2013 was $23,689 consisting primarily of proceeds from the sale of property and equipment for $42,776 which was offset by $19,087 related to the purchase of property and equipment.


Our net cash provided by financing activities was $957,097 for the three months ended March 31, 2014. This consisted of $130,000 in proceeds from the issuance of notes, $1,009,142 in net proceeds from our line of credit, and $12,500 in proceeds from the exercise of warrants, which amounts were offset by payments on notes payable of $190,378 and $4,167 in payments for deferred financing costs.  Our net cash used in financing activities was $67,209 in the three months ended March 31, 2013. This consisted primarily of payments on notes payable for $173,334, which was offset by $18,750 received upon the exercise of warrants and $87,375 received on the sale-leaseback transaction.  


The net decrease in cash for the three months ended March 31, 2014 was $809,288 as compared to a net decrease in cash of $226,961 for the three months ended March 31, 2013.


Accounts Receivable Financing Facility.


On June 26, 2013, our wholly-owned subsidiaries, KMHVC, Inc. and Apache Energy Services, LLC (the “Borrower”) entered into a $2 million revolving accounts receivable financing facility with Rosenthal & Rosenthal. The financing facility provides for the Borrower to have access to the lesser of (i) $2 million or (ii) 85% of Net Amount of Eligible Receivables (as defined in the financing agreement). The financing facility is paid for by the assignment of the Borrower’s accounts receivable to Rosenthal and is secured by the Borrower’s assets. The financing facility has an interest rate of 4.00% in excess of the prime rate reported by the Wall Street Journal per annum.  In addition, the Borrower paid Rosenthal a facility fee of $30,000 on the closing and an annual fee of $20,000 and a monthly administration fee of $1,000 as well as monthly additional charges of not less than $2,000. The financing facility is for an initial term of two-years and will renew on a year to year basis, unless terminated in accordance with the financing agreement.  If the facility is terminated prior to the first anniversary, Borrower is



13



obligated to pay Rosenthal a fee of $40,000 and if terminated after the first anniversary and prior to the second anniversary then Borrower shall pay a fee of $20,000. We guaranteed repayment of the line of credit, which guaranty is secured by our assets.  On November 20, 2013, our wholly-owned subsidiary, Aqua Handling of Texas, LLC (dba AquaTex) entered into an Assumption Agreement Rosenthal & Rosenthal, Inc. under which AquaTex became an additional borrower under the financing facility with Rosenthal.  In connection with AquaTex becoming an additional borrower under the facility, the Lender increased the maximum amount available under the facility to $3 million.  In January 2014, the Lender increased the maximum amount available under the facility to $4 million.  In April 2014, the Lender increased the maximum amount available under the facility to $5 million.   The Company is required to maintain at the end of each fiscal quarter a tangible net worth of not less than negative $1 million and working capital of not less than $4.5 million.  The Company was not in compliance with the working capital covenant for the period ended March 31, 2014.  The lender issued a waiver of this non-compliance for the period ended March 31, 2014 on May 9, 2014.


Promissory Notes – 2014


On January 15, 2014, we and our wholly-owned subsidiary AES, issued a 10% promissory note in the amount of $370,000 to a single accredited investor.  The note has a maturity date of July 15, 2014 and was issued as consideration for a sublicense fee for AES’ sublicense of a water treatment platform unit.  We did not receive any proceeds for issuance of this note.  On February 17, 2014, we, and our wholly-owned subsidiary, Apache Energy Services, LLC issued a 10% promissory note in the amount of $130,000 to a single accredited investor. This note has a July 15, 2014 maturity date. We received cash proceeds of $130,000 from the issuance of this note, which proceeds were used for working capital and general corporate purposes.

                 

                 On February 27, 2014, our wholly-owned subsidiary KMHVC entered into a Security Agreement –Conditional Sales Contract with a third-party equipment seller for the purchase of equipment.  KMHVC financed $117,120 of the purchase price and agreed to pay an additional $5,459 in finance charges (equal to 8.5% of the amount financed) for a total amount due under the conditional sales contract/promissory note of $122,579.  To secure payment, under this conditional sales contract/promissory note, KMHVC granted the equipment seller a purchase money security interest in the equipment sold.   The conditional sales contract/promissory note is payable in 12 equal monthly installments of $10,215 with the first payment due on March 27, 2014 and the last payment due on February 27, 2015.  We provided a continuing guaranty of KMVHC’s obligations under this conditional sales contract/promissory note.

Convertible Debenture 2013


From October 31, 2013 through November 30, 2013, we issued 10% convertible promissory notes in the aggregate principal amount of $1,000,000 to ten accredited investors.  We received cash proceeds of $850,000 from the issuance of these notes and $150,000 of these notes were issued in consideration of an investor’s cancellation of an existing promissory note dated December 17, 2012 in the principal amount of $150,000.  The notes have 2 year term.  The notes are convertible into our common stock at a fixed conversion price of $0.50 per share. The proceeds were used to fund the cash consideration for our acquisition of Aqua Handling of Texas, LLC and for working capital and general corporate purposes.  We relied on the exemption from registration provided by Rule 506 and/or Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of the convertible notes.


Promissory Notes - 2012


On December 17, 2012, the registrant issued a 10% subordinated secured promissory note in the amount of $150,000 with a warrant to purchase 550,000 shares of the registrant’s common stock. The aggregate gross proceeds from the sale of the note and warrant was $150,000. The note is due on December 17, 2013 and bears interest at the ten percent (10%).   The note is secured by the assets of the registrant.  The notes was issued with a warrant to purchase 550,000 shares of the registrant’s common stock at an exercise price of $0.09 per share   The warrant is exercisable until five (5) years after the closing date.  The registrant relied on the exemption from registration provided by Rule 506 and/or Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of the notes and the warrants.  This note was cancelled in exchange for $150,000 of 10% convertible promissory notes issued on October 31, 2013.


On November 5, 2012, we, and our wholly-owned subsidiary, Apache Energy Services, LLC issued a $600,000 10% secured promissory note to a single accredited investor. The aggregate gross proceeds from the sale of the note were $600,000. The proceeds were used to facilitate the purchase of equipment by AES from a third party (see Item 5 below). The note is due on March 30, 2013 and bears interest at the ten percent (10%). The notes are secured by the Vanderra equipment purchased with the proceeds. The issuance was exempt under Section 4(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended.  This note was paid in full on June 27, 2013.


On October 31, 2012, we issued a $50,000 10% subordinated secured promissory note to a related party. The aggregate gross proceeds from the sale of the note were $50,000.  The proceeds were used for working capital



14



and general corporate purposes. The note is due on March 30, 2013 and bears interest at ten percent (10%). The note is secured by our assets. The issuance was exempt under Section 4(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended.  This note was paid on May 24, 2013.


On September 24, 2012, we issued $300,000 of principal amount of 10% subordinated secured promissory notes and warrants to purchase our common stock. The aggregate gross proceeds from the sale of the notes and warrants were $300,000. The proceeds were used to fund the cash purchase price of the acquisition of Apache Energy Services LLC (dba AES Water Solutions) and for working capital requirements. The notes are due on September 23, 2013 and bear interest of ten percent (10%). The notes are secured by our assets. The notes were issued with “Class A” warrants to purchase up to 1,800,000 shares of the our common stock at an exercise price of $0.10 per share and “Class B” warrants to purchase up to 900,000 shares of the registrant’s common stock at an exercise price of $0.10 per share. The number of Warrant Shares underlying each Class A Warrant equals to the principal amount of the Note subscribed for by a purchaser Subscriber multiplied by six (6) The Class B Warrants are exercisable beginning on the one-year anniversary of the Closing Date (the “Target Date”) and the number of warrant shares underlying the Class B Warrant equals either (A) the principal amount of note subscribed for by a purchaser multiplied by 3 shares, if the Market Price (as defined in the Class B Warrant) on the Target Date is less than $0.20 or (B) 0 shares, if the Market Price on the Target Date is at least $0.20. The Class A Warrants and Class B Warrants are exercisable until five (5) years after the closing date. The Class A Warrants and the Class B Warrants are exercisable on a cashless basis. In September 2013, the Class B Warrant did not vest on the Target Date based on the Market Price and were effectively forfeited.  On September 25, 2013 warrant holders exercised warrants to purchase 1,720,000 shares of our common stock for a total consideration of $169,800 which consideration was paid by reduction of indebtedness for each warrant holder by the amount equal to their exercise price under the outstanding note. The remaining principal balance of $130,200 and accrued interest was paid between September 25, 2013 and February 21, 2014.


Liquidity and Capital Requirements – HII Technologies, Inc.


As of the date of this report, we believe that we will be able to fund our operations for the next 12 months by a combination of the continuing operations of our three divisions and our senior revolving line of credit for accounts receivables.


Critical Accounting Policies


Our discussion and analysis of our financial conditions and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements requires managers to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates, including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience, and other assumptions as the basis for making judgments. Actual results could differ from those estimates.


Accounts receivable are comprised of unsecured amounts due from customers.  AES carries its accounts receivable at their face amounts less an allowance for bad debts. The allowance for bad debts is recognized based on management’s estimate of likely losses per year, based on past experience and review of customer profiles and the aging of receivable balances.


Goodwill acquired in a business acquisition is initially measured at cost being the excess of the cost of business combination over the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortized but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.


Revenue is recognized when all of the following criteria are met: 1) persuasive evidence of an arrangement, 2) delivery has occurred, 3) the price is fixed and determinable, and 4) collectability is reasonably assured.


Off-Balance Sheet Arrangements


None.




15




ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.


ITEM 4 – CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q.


Based on this evaluation, our chief executive officer and chief financial officer concluded that, as March 31, 2014, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.


Changes in Internal Control Over Financial Reporting


There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Limitations on Effectiveness of Controls and Procedures


In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.




16



PART II:  OTHER INFORMATION



ITEM 1 – LEGAL PROCEEDINGS


None.


ITEM 1A – RISK FACTORS


As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.


ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


1.

See Item 5 of our Annual Report on Form 10-K for the year ended December 31, 2013.

2.

On April 25, 2014, we entered into an investor relations consulting agreement pursuant to which we agreed to issue 250,000 shares of our common stock to a consultant in consideration of services to be rendered under the Agreement.  These shares have not yet been issued.  These shares will be issued as restricted securities and the certificate for these shares will contain a legend stating that the shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and setting forth or referring to the restrictions on transferability and the sale of shares under the Securities Act.  We are relying on the exemption provided by Section 4(2) under the Securities Act for the issuance of these shares.

3.

On April 30, 2014, entered into stock purchase agreements with each of Brent Mulliniks, Billy Cox, Chris George and Buchanan Ventures under which we agreed to issue an aggregate of 276,599 shares of our common stock for an aggregate purchase price of $138,300.55.   Each of these purchasers are current noteholders of HII Technologies and agreed to cancel indebtedness under their respective notes equal to their purchase price of the shares of common stock purchased by them.   Accordingly, no cash proceeds were received by us.  These shares have not yet been issued.  Mr. Mulliniks is a director of the Company and President of the Company’s wholly-owned subsidiary AES.  Mr. Cox serves as Executive Vice President of AES and Mr. George is Executive Vice President of the Company’s AquaTex subsidiary.  Each of the purchasers is an accredited investor. These shares will be issued as restricted securities and the certificate for these shares will contain a legend stating that the shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and setting forth or referring to the restrictions on transferability and the sale of shares under the Securities Act.  We are relying on the exemption provided by Section 4(2) and/or Rule 506 under the Securities Act for the issuance of these shares.



ITEM 3 – DEFAULT UPON SENIOR SECURITIES


None.


ITEM 4 – MINE SAFETY DISCLOSURES


Not applicable.


ITEM 5 – OTHER INFORMATION

                

                 On February 27, 2014, our wholly-owned subsidiary KMHVC  entered into a Security Agreement –Conditional Sales Contract with a third-party equipment seller for the purchase of equipment.  KMHVC financed $117,120 of the purchase price and agreed to pay an additional $5,459 in finance charges (equal to 8.5% of the amount financed) for a total amount due under the conditional sales contract/promissory note of $122,579.  To secure payment, under this conditional sales contract/promissory note, KMHVC granted the equipment seller a purchase money security interest in the equipment sold.   The conditional sales contract/promissory note is payable in 12 equal monthly installments of $10,215 with the first payment due on March 27, 2014 and the last payment due on February 27, 2015.  We provided a continuing guaranty of KMVHC’s obligations under this conditional sales contract/promissory note.

 

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ITEM 6 - EXHIBITS


Item No.

Description

Method of Filing

 

 

 

10.1

10.2

31.1

Security Agreement - Conditional Sales Contract

Continuing Guaranty

Certification of Matthew C. Flemming pursuant to Rule 13a-14(a)

Filed herewith.

Filed herewith.

Filed herewith.

32.1

Chief Executive Officer and Chief Financial Officer Certification pursuant o 18 U.S.C. § 1350 adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

Filed herewith.


SIGNATURES


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



 

HII TECHNOLOGIES, INC.

 

 

 

 

May 14, 2014

 /s/ Matthew C. Flemming                          

 

Matthew C. Flemming

 

President, Chief Financial Officer, Secretary, Treasurer and Director

 

(Principal Executive Officer and Principal Accounting Officer)

 

 

 

 

 

 

 

 





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