UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.  20549
 
 Form 10-Q
 
 (Mark One)
 
 [X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the quarterly period ended September 30, 2012
 
 [   ]
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:  000-53443
 
 HPEV, INC.
 (Exact name of registrant as specified in its charter)
 
 Nevada

(State or other jurisdiction of

incorporation or organization)
75-3076597

(I.R.S. Employer

Identification No.)27420 Breakers Drive

Wesley Chapel, FL

(Address of principal executive offices)
33544

(Zip Code)
 
 Registrant’s telephone number, including area code    (813) 929-1877
 
 (Former name, 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  XNo .
 
 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(Do not check if a smaller reporting company)
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes      No X.
 
 
 
 
 
 Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:
 
 Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   Yes No .
 
 Applicable only to corporate issuers:
 
 Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  As of November 1, 2012, there were 47,646,441 shares of common stock, $0.001 par value, issued and outstanding.
   2
 
 HPEV, INC.
 
 TABLE OF CONTENTS
 PART I – FINANCIAL INFORMATION
4ITEM 1
Financial Statements (Unaudited)
5ITEM 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
18ITEM 3
Quantitative and Qualitative Disclosures About Market Risk
24ITEM 4
Controls and Procedures
24PART II – OTHER INFORMATION
27ITEM 1
Legal Proceedings
27ITEM 1A
Risk Factors
27ITEM 2
Unregistered Sales of Equity Securities and Use of Proceeds
27ITEM 3
Defaults Upon Senior Securities
27ITEM 4
Mine Safety Disclosures
27ITEM 5
Other Information
28ITEM 6
Exhibits
28
 3
 
 PART I – FINANCIAL INFORMATION
 
 This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”).  These statements are based on management’s beliefs and assumptions, and on information currently available to management.  Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.
 
 Forward-looking statements are not guarantees of future performance.  They involve risks, uncertainties and assumptions.  Our future results and shareholder values may differ materially from those expressed in these forward-looking statements.  Readers are cautioned not to put undue reliance on any forward-looking statements.
  4
  ITEM 1                      Financial Statements
 
 PART 1 – FINANCIAL INFORMATION
 
 HPEV, INC.
 (A Development Stage Company)
 CONSOLIDATED BALANCE SHEETS
 UNAUDITED
 September 30,

2012


December 31, 
2011ASSETSCurrent assetsCash

$
19


$
78,361Prepaid expenses


800,069



911,589Finance costs


108,924



-Total current assets


909,012



989,950Intangible assets


69,757



44,564Total assets

$
978,769


$
1,034,514LIABILITIES AND STOCKHOLDERS' EEQUITY (DEFICIT)Current liabilitiesBank overdraft

$
-


$
410Accrued interest payable


5,380



-Accounts payable


376,328



103,701Accounts payable - related party


66,500



-Loans payable


436,222



-Notes payable - related party


939,274



884,594Total current liabilities


1,823,704



988,705Total liabilities


1,823,704



988,705Stockholders' equity (deficit)Preferred stock $.001 par value: 15,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2012 and December 31, 2011


-



-Common stock; $.001 par value; 100,000,000 shares authorized, 47,646,441 and 48,613,125 shares issued and outstanding as of  September 30, 2012 and December 31, 2011


47,646



48,613Additional paid-in capital


4,467,362



13,121,411Common stock receivable


-



(8,000,000
)Accumulated deficit during development stage


(5,359,973
)


(5,124,215
)Total stockholders' equity (deficit)


(844,935
)


45,809Total liabilities and stockholders' equity (deficit)

$
978,769


$
1,034,514
 
 The accompanying notes are an integral part of these consolidated financial statements.
  5
  HPEV, INC.
 (A Development Stage Company)
 CONSOLIDATED STATEMENTS OF OPERATIONS
 UNAUDITED
 From Inception


From Inception(March 24, 2011)


(March 24, 2011)Three months ended


Nine months ended


through


throughSeptember 30,

2012


September 30,

2011


September 30,

2012


September 30,

2011


September 30,

2012Revenues

$
-


$
-


$
-


$
-


$
-Cost of goods sold


-



-



-



-



-Gross profit


-



-



-



-



-Operating expensesDirector stock compensation


-



-



(2,650,000
)


-



-Consulting fees


501,923



358,425



1,408,002



1,433,655



3,012,582Professional fees


19,480



85,342



162,984



269,417



701,463Research and development


4,744



35,715



453,875



37,325



568,230General and administrative


4,561



4,521



64,427



23,206



106,228Loss on deposit


-



-



-



-



100,000Loss on intangible property


-



-



-



-



75,000Total operating (income) expenses


530,708



484,003



(560,712
)


1,763,603



4,562,503Other expenseInterest expense


180,714



-



282,871



-



282,871Finance cost


315,773



-



513,599



-



513,599Net loss

$
(1,027,195
)

$
(484,003
)

$
(235,758
)

$
(1,763,603
)

$
(5,359,973
)Basic loss per common share

$
(0.02
)

$
(0.01
)

$
(0.00
)

$
(0.04
)Basic weighted average commonshares outstanding


47,646,411



48,259,875



47,864,741



43,984,354
 
 
 The accompanying notes are an integral part of these consolidated financial statements.
  6
  HPEV, Inc.
 (A Development Stage Company)
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 UNAUDITED
 Nine


From Inception


From InceptionMonths


(March 24, 2011)


(March 24, 2011)Ended


through


throughSeptember 30, 2012


September 30, 2011


September 30, 2012Cash flows from operating activities:Net loss

$
(235,758
)

$
(1,763,603
)

$
(5,359,973
)Adjustments to reconcile net loss tonet cash used by operating activities:Stock issued to founder


-



-



22000Stock issued for services


1,201,520



-



1,201,520Stock options issued for penalty


-



-



108,420Warrants issued for loan penalty


68,233



-



68,223Warrants issued for interest


209,258



-



209,258Stock compensation


-



1,451,877



1,600,802Amortization of financing cost


513,599



-



513,599Director stock compensation from shareholder


(2,650,000
)


-



-Impairment of intangible asset & deposit


-



-



175,000Changes in operating assets and liabilities:Increase in accrued interest


5,380



-



5,380Increase in accounts payable related party


66,500



-



66,500Net cash used by operating activities


272,627



47,267



364,691Net cash used by operating activities


(548,641
)


(264,459
)


(1,024,570
)Cash flows from investing activities:Increase of intangible assets


(25,193
)


-



(69,757
)Cash acquired through reverse merger


-



37



37Net cash provided by (used by) investing activities


(25,193
)


37



(69,720
)Cash flows from financing activities:Proceeds from sale of common stock


5,000



-



55,000Proceeds from notes payable


436,222



-



436,222Proceeds from notes payable - related party


55,470



316,717



602,877Payments from notes payable- related party


(1,200
)


(3,000
)


(200
)Bank overdraft


-



-



410Net cash provided by financing activities


495,492



313,717



1,094,309Net increase (decrease) in cash and cash equivalents


(78,342
)


49,295



19Cash, beginning of period


78,361



-



-Cash, end of period

$
19


$
49,295


$
19Supplemental Schedule of non-cash activitiesShares issued for services

$
(800,069
)

$
(1,082,514
)

$
(1,711,658
)Prepaid expense acquired under reverse merger

$
-


$
(375,003
)

$
(375,003
)Intangible asset acquired under reverse merger

$
-


$
(75,000
)

$
(75,000
)Deposit acquired under reverse merger

$
-


$
(100,000
)

$
(100,000
)Common stock receivable acquired under reverse merger

$
8,000,000


$
8,000,000


$
-Accounts payable acquired under reverse merger

$
-


$
11,637


$
11,637Notes payable acquired under reverse merger

$
-


$
336,187


$
336,187Warrants granted as finance cost

$
(108,924
)

$
-


$
(108,924
)
 
 
 The accompanying notes are an integral part of these consolidated financial statements.
 
 7
 
 HPEV, Inc.
 (A Development Stage Company)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2012
 UNAUDITED
 
 The accompanying consolidated financial statements of HPEV, Inc. (“HPEV” or the “Company”) are unaudited, but in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary to fairly state the Company’s financial position, results of operations, and cash flows as of and for the dates and periods presented.  The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.
 
 These unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the period from inception (March 24, 2011) to December 31, 2011, filed with the Securities and Exchange Commission (the “Commission”).  The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2012 or for any future period.
 
 NOTE 1 – DESCRIPTION OF BUSINESS
 
 HPEV, Inc., a Nevada corporation (formerly known as Bibb Corporation and Z3 Enterprises, Inc.) (hereinafter referred to as “HPEV” or the” Company”), was incorporated in the State of Nevada on July 22, 2002.
 
 On March 29, 2011, the Company (under the name Z3 Enterprises) entered into a Share Exchange Agreement to acquire 100 shares, constituting all of the issued and outstanding shares of HPEV Inc., a Delaware corporation (“HPEV-DE”), in consideration for the issuance of 22,000,000 shares of Company common stock.  Upon closing of the Share Exchange on April 15, 2011, HPEV-DE became a wholly owned subsidiary of the Company.
 
 For accounting purposes, the acquisition of HPEV-DE by the Company was recorded as a reverse acquisition of a public company and recapitalization of the Company based on factors demonstrating that HPEV-DE represents the accounting acquirer.
 
 HPEV-DE was incorporated under the laws of the State of Delaware on March 24, 2011 to commercialize the technology from patents developed by two of its shareholders.  Activities during its start-up stage were nominal.
 
 Subsequent to the closing of the Share Exchange, the Company changed its business focus to the commercialization of HPEV-DE technologies in a variety of markets by licensing its thermal dispersion technologies to engine, generator and vehicle component manufacturers, among others.  The Company also plans to license its hybrid electric vehicle conversion system to fleet owners, vehicle dealers and service centers.
 
 On May 5, 2011, a total of 7 patents (1 granted, 6 pending) were assigned to HPEV-DE by Thermal Motors Innovations, LLC, a company controlled by the developers of the patents.  On March 13, 2012, HPEV-DE was awarded a patent for a composite heat structure application in submersible motors.  On April 2, 2012, HPEV-DE received a Notice of Allowance regarding a patent covering the incorporation of a totally enclosed heat pipe technology in bearings and related structures. On April 3, 2012, the Company received notice that one of its patents-pending - a totally enclosed heat pipe cooled motor – had been awarded.  On June 14, 2012, the Company received notice that another one of its patents-pending – a heat pipe application for hermetic motors – had been awarded. Three additional patents are pending and two additional patents-pending remain to be assigned to HPEV-DE.  Therefore, as of September 30, 2012, HPEV-DE, has been assigned the rights to five patents and three patents-pending with two remaining to be assigned.See Note 9 – Intellectual Property.
  8
 
 The patents and patents-pending assigned to HPEV-DE cover thermal dispersion technologies and their applications as well as an electric load assist.  The utilization of thermal technologies should increase the horsepower of electric motors and enhance the lifespan and effectiveness of heat-producing vehicle components.  The electric load assist is based on the Company’s parallel vehicle platform which makes it possible for hybrid electric vehicles to utilize power in any combination from the gas or diesel engine and an electric motor installed on-board.
 
 On April 5, 2012, a Certificate of Amendment to the Articles of Incorporation was filed with the Nevada Secretary of State noting the change in the Company name to HPEV, Inc.; the increase in authorized common stock to 100,000,000 shares; the increase in preferred stock to 15,000,000 shares; and the authorization of the Board to divide or change the powers, preferences, qualifications, limitations and rights of the preferred shares by resolution.
 
 On April 5, 2012, the Board of Directors voted to amend the bylaws and establish the new registered agent in the State of Nevada as InCorp Services.  It voted to change the number and titles of corporate officers and to enable the alteration, amendment or repeal of the bylaws either by approval of a majority of shareholders or by the approval of the Board.  It also removed clauses that restricted the duties and authority of the Board committees as well as removed a clause regarding the resignation of Officers.  Finally, it appointed Timothy Hassett, Chief Executive Officer; Quentin Ponder, Chief Financial Officer (he remains Treasurer); Theodore Banzhaf, President; and Judson Bibb, Vice President (he remains Secretary).
 
 On April 6, 2012, the Board of Directors amended other articles and sections of the bylaws.  Specifically, they voted to increase the number of directors, to enable the filling of vacancies on the board of directors by majority vote of the remaining directors or director and to appoint Timothy Hassett and Quentin Ponder to serve as Chairman of the Board and Vice Chairman, respectively.
 
 On April 20, 2012, the Financial Industry Regulatory Authority (FINRA) approved the name change from Z3 Enterprises, Inc. to HPEV, Inc and the symbol change from BIBB to WARM.  The changes took effect on April 23, 2012.
 
 As operations have consisted of general administrative and pre-production activities, the Company is considered a development stage company in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915.
 
 NOTE 2 - GOING CONCERN
 
 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.  Since the reverse merger of HPEV, Inc. and Z3 Enterprises, Inc. on April 15, 2011, cash outlays have been $1,024,570 from operating activities and $69,720 from investing activities which have been financed primarily through loans.The net book loss (which includes the tax loss carryforward of Z3 Enterprises prior to the reverse merger) is approximately $5,359,973 during the period from March 24, 2011 (Date of Inception) through September 30, 2012. The Company has not fully commenced its operations and is still in the development stages, raising substantial doubt about the Company’s ability to continue as a going concern.The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due.At this time,the Company is seeking additional sources of capital through the issuance of debt, equity, or joint venture agreements, but there can be no assurance the Company will be successful in accomplishing its objectives.
  9
  These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
 
 It is possible management may decide that the Company cannot continue with its business operations as outlined in the current business plan because of a lack of financial resources and may be forced to seek other potential business opportunities that may be available.
 
 NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 This summary of significant accounting policies of HPEV, Inc. is presented to assist in understanding the Company’s consolidated financial statements.  The consolidated financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the consolidated financial statements.
 
 Accounting Method
 
 The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
 
 Principles of Consolidation
 
 These consolidated financial statements include the accounts of HPEV-DE and its parent HPEV (formerly known as Z3 Enterprises).  On April 20, 2012, the Company officially changed its name to HPEV, Inc.
 
 All significant inter-company transactions and balances have been eliminated.
 
 Year end
 
 The Company’s year-end is December 31.
 
 Cash and Cash Equivalents
 
 For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents.
  10
  Revenue Recognition
 
 The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” and No. 104, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured.  For the quarters ended September 30, 2012 and 2011, and for the period from inception to September 30, 2012, the Company did not report any revenues.
 
 Earnings Per Share
 
 The Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 which provides for calculation of “basic” and “diluted” earnings per share.  Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period.  Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity.
 
 Fair Value of Financial Instruments
 
 The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board (FASB) guidance regarding disclosures about fair value of financial instruments, approximate the carrying amounts presented in the accompanying consolidated balance sheets.
 
 Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157 Fair Value Measurements (“SFAS 157”), superseded by ASC 820-10, which defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities.  The impact of adopting ASC 820-10 was not significant to the Company’s consolidated financial statements.  ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The standard describes three levels of inputs that may be used to measure fair value:
 
 ●
Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.
 
 ●
Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.
 
 ●
Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.
 
 In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.  Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.  The valuation of our derivative liability is determined using Level 1 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices.
  11
  Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2012.  The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.  These financial instruments include cash, accounts payable and accrued expenses, loan payable and notes payable – related party.
 
 Income Taxes
 
 The Company provides for federal and state income taxes payable, as well as for those deferred because of the timing differences between reporting income and expenses for financial statement purposes versus tax purposes.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled.  The effect of a change in tax rates is recognized as income or expense in the period of the change.  A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount that is more likely than not to be realized.
 
 Upon inception, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), superseded by ASC 740-10.  The Company did not recognize a liability as a result of the implementation of ASC 740-10.  A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit as of the date of adoption.  The Company did not recognize interest expense or penalties as a result of the implementation of ASC 740-10.  If there were an unrecognized tax benefit, the Company would recognize interest related to unrecognized tax benefits in interest expense and penalties in other operating expenses.
 
 Employee Stock Based Compensation
 
 The FASB issued SFAS No.123 (revised 2004), Share-Based Payment, which was superseded by ASC 718-10.  ASC 718-10 provides investors and other users of financial statements with more complete and neutral financial information, by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements.  That cost will be measured based on the fair value of the equity or liability instruments issued. ASC 718-10 covers a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.  As of September 30, 2012, the Company has not implemented an employee stock based compensation plan.
 
 Non-Employee Stock Based Compensation
 
 The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in EITF 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, which was superseded by ASC 505-50.  The Company issues compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services.
  12
 
 Use of Estimates
 
 The process of preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses.  Such estimates primarily relate to unsettled transactions and events as of the date of the consolidated financial statements.  Accordingly, upon settlement, actual results may differ from estimated amounts.
 
 Research and development
 
 Costs of research and development are expensed in the period in which they are incurred.
 
 Recent accounting standards
 
 The Company has evaluated the recent accounting pronouncements through ASU 2012-07 and believes that none of them will have a material effect on the Company’s financial statements.
 
 Reclassification
  Upon completion of the Company’s September 30, 2012 financial statements, accounting reclassification adjustments were made for certain warrants which were issued as a cost of financing.  Warrants valued at $99,229 and previously included in professional fees were reclassified from professional fees and included in interest expense for the three and six months ended June 30, 2012 and from inception (March 24, 2011) to June 30, 2012.  There was no impact on the net loss for the periods then ended.
 
 NOTE 4 - LOSS PER SHARE
 
 Components of loss per share for the three and nine months ended September 30, 2012 and 2011 are as follows:
 
 From inceptionFor the Three Months Ended


For the Three Months Ended


For the Nine Months Ended


(March 24, 2011)

throughSeptember 30, 2012


September 30, 2011


September 30, 2012


September 30, 2011Net (loss)attributable tocommon stockholders

$
(1,027,195
)

$
(484,003
)

$
(235,758
)

$
(1,763,603
)Weighted AverageShares Outstanding


47,646,441



48,259,875



47,864,741



43,984,354Basic Loss Per Share

$
(0.02
)

$
(0.01
)

$
(0.00
)

$
(0.04
)
  13
  NOTE 5 – CAPITAL STOCK
 
 Common Stock
 
 The Company has 100,000,000 common shares and 15,000,000 preferred shares authorized and 47,646,441 common shares were issued and outstanding as of September 30, 2012.  No preferred shares were issued and outstanding as of September 30, 2012.
 
 Stock issuances during the nine months ended September 30, 2012 consisted of the following:
 
 On February 11, 2012, the Board of Directors authorized the issuance of 1,000,000 shares of restricted common stock valued at $1.07 as of the date of the agreement, to Lagoon Labs, LLC in exchange for consultations with management as well as providing investor communications and public relations, with an emphasis on digital and social media, for 12 months.  The shares were issued on March 23, 2012. See Note 10 – Prepaid Expense.
 
 On February 17, 2012, 83,350 shares belonging to IFMT, Inc. were returned to the transfer agent and canceled.  The shares were originally issued as part of the Usee transaction which was subsequently terminated.  Prior to the reverse merger with HPEV, Inc., the Company entered into an acquisition agreement with Usee, Inc. and Usee CA, Inc.  Upon further due diligence investigation, the Company cancelled the agreement and all the shares were required to be returned.
 
 On April 5, 2012, a Certificate of Amendment to the Articles of Incorporation was filed with the Nevada Secretary of State noting the increase in authorized common stock to 100,000,000 shares.
 
 On April 13, 2012, Judson Bibb returned the 5,000,000 shares he had received from Phoenix Productions and Entertainment Group (PPEG) back to PPEG resulting in a reversal of the expense in the quarter ending March 31, 2012.
 
 On June 8, 2012, the Board of Directors authorized the issuance of 26,666 shares of restricted common stock valued at $0.75 to Wayne Wilcox of Geartech Heavy Duty in lieu of payment for work performed on a component of the initial hybrid conversion vehicle. The Board of Directors also authorized the issuance of 10,000 shares of restricted common stock valued at $0.50 to an accredited investor in exchange for $5,000 in funding.
 
 NOTE 6 – WARRANTS AND OPTIONS
 
 Warrants
 
 On June 4, 2012, the Company issued a warrant for 303,569 shares of common stock to McMahon Serepca, LLP with an exercise price of $0.275. The vesting period on these grants was immediate. The value of these warrants were estimated by using the Black-Scholes option pricing model with the following assumptions: expected life of 2.5 years; risk free interest rate of 0.62%; dividend yield of 0% and expected volatility of 225%. To account for such grants to non-employees, we recorded the issuance as interest expense in the amount of $99,229.
  14
 
 On August 6, 2012, the Company issued a warrant for 303,569 shares of common stock to McMahon Serepca, LLP with an exercise price of $0.39. The vesting period on these grants was immediate. The value of these warrants was estimated by using the Black-Scholes option pricing model with the following assumptions: expected life of 2.5 years; risk free interest rate of 0.62%; dividend yield of 0% and expected volatility of 218%. To account for such grants to non-employees, we recorded the issuance as interest expense in the amount of $110,029.
 
 In April, May, June and July of 2012, Spirit Bear Limited made cash advances for and funded loans to the Company in the total amount of $186,222, creating direct financial obligations of the Company.  On August 8, 2012, The Company and Spirit Bear reached a definitive agreement concerning the terms of the loans, including the Company’s obligations to repay Spirit Bear within 180 days from each date of funding, and the Company’s obligation to issue warrants to Spirit Bear to purchase 3.5714 shares of common stock per dollar of consideration provided by Spirit Bear, subject to certain adjustments, at the per share price of $.35, as partial consideration for the loans.  The warrants granted to Spirit Bear totaled 665,374 shares.  The value of these options was estimated by using the Black-Scholes option pricing model with the following assumptions: expected life of 2 years; risk free interest rate of 0.33%; dividend yield of 0% and expected volatility of 250%. These options were valued at $622,523 and the aggregate value was capitalized as financing cost and has been accreted and charged to financing cost expense in the amount of $513,599 as of September 30, 2012.
 
 In the event payment is not made within 90 days of the receipt of each loan, the Company is required to provide penalty warrants. As of September 30, 2012, penalty warrants for the loan made in April total 261,888, penalty warrants for the loan made in May total 56,908, and penalty warrants for the loan made in June total 192. Total penalty warrants owed to Spirit Bear at the end of the third quarter total 318,988. The value of these options was estimated by using the Black-Scholes option pricing model with the following assumptions: expected life of 2 years; risk free interest rate of 0.62%; dividend yield of 0% and expected volatility of 245%. These options were charged to interest expense in the amount of $68,233 as of September 30, 2012.
 
 On October 31, 2011 stock options to purchase 200,000 shares at $0.55 were issued to The Crone Law Group, these options were issued in order to satisfy a penalty services rendered and payments defrayed.  The value of these options was estimated by using the Black-Scholes option pricing model with the following assumptions: expected life of 3 years; risk free interest rate of 0.41%; dividend yield of 0% and expected volatility of 289%. These options were valued at $108,420 and charged to professional fees.
 
 The following is a summary of the status of all of the Company’s stock warrants as of September 30, 2012 and changes during the nine months ended on that date:
 
 Number

of Warrants


Weighted-Average

Exercise Price


Weighted-Average

Remaining Life (Years)Outstanding at December 31, 2011


-


$
-



-Granted


1,591,500


$
0.33



2.71Exercised


-


$
0.00



-Cancelled


-


$
0.00



-Outstanding at September 30, 2012


1,591,500


$
0.34



2.71Exercisable at September 30, 2012


1,591,500


$
0.33



2.71
 15
 NOTE 7 – RELATED PARTY TRANSACTIONS
 
 As a consequence of the reverse merger, the Company took over obligations consisting of accounts payable of $11,637 (non-related party) and a note payable balance of $313,687 due to Phoenix Productions and Entertainment Group, Inc., a significant shareholder of the Company’s common stock.  The terms of the loan agreement do not require payment of interest and repayment of the loan is to begin 15 days after receipt of initial revenues related to projects funded by PPEG loans.  Maturity of the loan is perpetual or upon mutual agreement of both parties or if conditions are breached or in default.
 
 Subsequent to the reverse merger, Phoenix Productions and Entertainment Group, Inc. made loans to the Company of $598,407 leaving a balance due as of September 30, 2012 and December 31, 2011 of $911,894 and $862,094, respectively.
 
 During the period from inception (March 24, 2011) to September 30, 2012, Judson Bibb, Director, Secretary and Vice President, advanced $22,910 in interest-free, unsecured, due-on-demand funds.  As of September 30, 2012 and December 31, 2011 $22,910 and $22,500, respectively, remains due and payable.
 
 During the quarter ended September 30, 2012. Quentin Ponder, Director and Chief Financial Officer, loaned the Company a total of $5,470 in interest-free, unsecured, due-on-demand loans.
 As of September 30, 2012, $4,470 remains due and payable.
 
 NOTE 8 – NOTES PAYABLE
 
 On March 7, 2012, the Company signed a loan agreement with Action Media Group, LLC (a former shareholder) for $250,000.  The terms of the loan include: 3% annual interest and payment of principal and interest to begin at a mutually agreed upon date in the future.  Maturity of the loan is perpetual or upon mutual agreement of both parties or if conditions are breached or in default.
 
 Beginning on April 27, 2012, the Company received the first of two loans from Spirit Bear Limited totaling $135,000.  The first loan was received on April 27 for $100,000 and the second on May 22 for $35,000. A third loan was received on June 28 for $1,222. It covered travel expenses by the president of the Company who was involved in the negotiations with Spirit Bear. A fourth loan was received on July 11, 2012 for $50,000.
 
 Financing costs for the four loans from Spirit Bear totaled $622,523.  Each loan is unsecured, bears an interest rate of 1.28% and has a term of the lesser of 180 days or 3 business days after the Company’s next equity financing.  As of September 30, 2012, $513,599 has been amortized leaving a balance of $108,924 in financing costs.
 
 The terms were subject to negotiations which were not completed until August 8, 2012. See Note 12 – Subsequent Events
 
 NOTE 9 - INTELLECTUAL PROPERTY
 
 As of September 30, 2012, the Company’s wholly owned subsidiary, HPEV, Inc., has been assigned the rights to five patents and three patents-pending with two remaining to be assigned. Five issued patents and two patents-pending relate to the utilization of thermal dispersion technologies to remove heat from various types of electric motors, generators and a brake resistor. By removing heat in a more efficient manner, the thermal technologies should provide lower costs, improved performance benefits and longer product life.  The other patent-pending is an electric load assist that makes it possible for hybrid electric vehicles to utilize power in any combination from the gas or diesel engine and an electric motor installed on-board.
  16
 The direct cost for legal services related to the patents as of September 30, 2012 and December 31, 2011 was $69,757 and $44,564, respectively.  This amount was capitalized as an intangible asset.
 
 
 NOTE 10 - PREPAID EXPENSE
 
 On May 11, 2011, 1,823,185 common shares valued at $0.75 per share were issued to Capital Group Communication, Inc. in exchange for investor relations services valued at $1,367,389.  The services are for a 24 month term. As of September 30, 2012, the prepaid balance is $398,840.
 
 On March 23, 2012, 1,000,000 shares of restricted common stock valued at $1.07 per share were issued to Lagoon Labs, LLC in exchange for consultations with management as well as providing investor communications and public relations, with an emphasis on digital and social media.  The services are for a 12 month term. As of September 30, 2012, the prepaid balance is $401,229.
 
 NOTE 11 - COMMON STOCK RECEIVABLE
 
 On September 2, 2011, the Company and Richard Glisky signed a Rescission Agreement (“the Agreement) to rescindan Agreement for the Acquisition of Harvest Hartwell CCP, LLC (HHCCP), a Michigan limited liability company.  The Agreement for Acquisition was originally signed on September 30, 2010.
 
 As called for in the Rescission Agreement, the Company assigned 100% of its interests in HHCCP to the previous owner, Richard Glisky. Richard Glisky, in turn, assigned 1,920,000 shares of Company common stock back to the Company which the Company’s intended to have cancelled.  On February 23, 2012, 1,920,000 shares of the Company common stock was returned to the Company and canceled.  Consequently, the Company had an $8,000,000 stock receivable removed from its books.
 
 NOTE 12 - SUBSEQUENT EVENTS
 
 As of October 24, 2012, the Company was in default to Spirit Bear on the first loan for $100,000. The note was due 180 days after the issuance date which was April 27, 2012.  On October 26, 2012, the Company reached agreement with Spirit Bear to extend the term of the loan to November 30, 2012.
  17
 
 ITEM 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).  Forward-looking statements are, by their very nature, uncertain and risky.  These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
 
 Although the forward-looking statements in this Quarterly Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them.  Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements.  You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
 
 The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, its unaudited financial statements and related notes elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.
 
 Background
 
 We have not generated any revenues to date and we have a loan for $100,000 which was in default as of October 24, 2012.  On October 26, 2012, we reached agreement with the lender to extend the term of the loan to November 30, 2012.  We expect to begin to generate revenues in the first half of 2013.
 
 Through our wholly-owned subsidiary, HPEV, Inc., a Delaware corporation (“HPEV-DE”), we have developed and intend to commercialize thermal dispersion technologies in various product platforms, and have developed and intend to commercialize an electric load assist technology around which we have designed a vehicle retrofit system. In preparation, we have applied for trademarks for some of our technologies and their acronyms including ‘Totally Enclosed Heat Pipe Cooled’, ‘TEHPC’, ‘Electric Load Assist’ and ‘ELA’.
 
 We believe that our proprietary technologies, including our patent portfolio and trade secrets, can change the manufacturing cost structure in several large industries beginning with motor/generator and fleet vehicles.
  18
 
 The markets for products utilizing our technology include consumer, industrial and military markets, both in the U.S. and worldwide.  Our initial target markets include those involved in moving materials and moving people, such as:
 
 ●
Motors/Generators,
 ●
Compressors,
 ●
Turbines (Wind, Micro),
 ●
Bearings,
 ●
Electric Vehicles: rail, off-highway, mining, delivery, refuse,
 ●
Brakes/rotors/calipers,
 ●
Pumps/fans,
 ●
Passenger vehicles: auto, bus, train, aircraft,
 ●
Commercial vehicles: SUV, light truck, tram,
 ●
Military: boats, Humvee, truck, aircraft, and
 ●
Marine: boats ranging in size from 30 feet to 120 feet.
 
 Our Technologies
 
 Our technologies are divided into two distinct but complementary categories: heat dispersion technology and electric load assist technology.
 
 Heat Dispersion Technology
 
 Heat is an undesirable byproduct of anything that moves, especially motors.  Historically, a large percentage of the cost of manufacturing any motor is in the technology necessary to remove heat during its operation to prevent failure and increase power.  Heat can destroy motors, generators and many other types of machinery, and the energy necessary to remove heat can limit output.
 
 Our thermal dispersion technology removes heat via specialized heat pipes.  Heat pipes have been utilized for more than 50 years, but we have a proprietary process and design technology that makes our heat pipes usable in many applications that have previously not been effective.  The key is that our heat pipes move heat in ANY direction in a system that requires little or no maintenance and can be applied to almost any motor, generator or industrial product.  This allows for more efficient, smaller, and higher output machines, resulting in cooler motors and a longer operating life.
 
 Through HPEV-DE, we have been assigned the rights to five patents and have three other patents pending.  Our patent portfolio covers the application and integration of our heat pipes into various cooling schemes for enhanced heat removal in motors, generators and numerous other industrial applications including marine, aviation and military.  We believe that our technologies have the potential to deliver power output increases and cost reductions, depending on the machine type or motor/generator size, as follows:
 
 1.
Increase power density of current motor platforms by 20% to 50%,
 2.
Reduce total product cost by 12.5% to 25%,
 3.
Increase motor and generator efficiency by 1% to 2%, and
 4.
Increase motor and generator life.
  19
  We believe that products produced with our technologies have the potential to deliver operational savings as well, including:
 
 1.
Savings from reduced maintenance costs,
 2.
Savings from the standardization of multiple platforms down to a single platform,
 3.
Savings from the standardization of drawings and data around existing platforms,
 4.
Savings from the ability to use standard designs and standard insulation systems versus custom, and
 5.
Savings from the ability to integrate and produce on existing production lines with no retooling and no additional or minimum capital investment.
 
 Management plans to capture revenues for a significant portion of the value of these savings that will also be delivered to market.
 
 Our revenue model for the heat dispersion technology will be to license the technology in exchange for royalties.  We are entering into product development agreements with manufacturing partners.  We anticipate that we will begin to enter into license agreements upon  completion of our initial product development, when the product is ready to be manufactured on the licensee’s regular production line, after all development and testing have been completed.
 
 We expect to begin to generate revenues from our heat dispersion technology business in the first half of 2013.
 
 Electric Load Assist (ELA) Technology
 
 We have also developed proprietary Electric Load Assist (ELA) technology. The technology is the centerpiece of our vehicle retrofit system (separate and apart from our heat pipe technology and heat dispersion product development partnerships), which also relies on the benefits of heat removal and is protected by patents and patents-pending.
 
 With ELA, a vehicle engine does not have to work as hard as some of the work that was done by the engine is now performed by an electric motor running in parallel.  The vehicle still drives and feels the same, and our ELA controller allows full acceleration and braking control; however, the engine runs much more efficiently and burns significantly less fossil fuel.  The ELA controller allows the vehicle operator to determine the amount of load assist during operation, ranging from all-fuel to all-electric.  Our ELA system will provide a significant difference and improvement from, and competitive advantage over, current market offerings such as the Toyota Prius. If either the electrical system or the internal combustion engine fails, an ELA vehicle can operate on the remaining system.  In current market offerings, if either system fails, the vehicle fails.
 
 Our ELA technology is compatible with any manufacturer as well as any power source, including traditional gasoline/diesel engines, batteries and fuel cells.  Our technology should also provide a wide range of marine, aviation, industrial and military applications.
 
 Initially, our ELA system business is expected to generate revenue from transport companies and other businesses which own and/or manage fleets of Class 3, 4 and 5 or light to medium-duty trucks.  Our revenue model for the ELA technology will be to license the technology in exchange for royalties based on fuel savings.
  20
 
 We expect to begin to generate revenues from our ELA technology business in the first half of 2013.
 
 Going Concern
 
 As a result of our financial condition, we have received a report from our independent registered public accounting firm for our financial statements for the period from March 24, 2011 (Inception) to December 31, 2011 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern.  In order to continue as a going concern, we must effectively balance many factors and begin to generate revenue, so that we can fund our operations from our sales and revenues.  If we are not able to do this, we may not be able to continue as an operating company.
 
 Results of Operations for the Three and Nine Months Ended September 30, 2012
 
 We had no revenues for the three month period ended September 30, 2012.  Our operating expenses were $530,708, consisting entirely of consulting fees, professional fees, research and development, and general and administrative expenses as we continued our initial capital raise and negotiated contracts with potential clients.
 
 We also had no revenues for the nine month period ended September 30, 2012. Our operating income was ($560,712). The core expenses consisted of consulting fees, professional fees, research and development, general and administrative expenses totaling $2,298,546. For accounting purposes, they were offset by a director stock compensation of $2,650,000 which was rescinded on April 13, 2012.
 
 Revenues and Net Operating Loss
 
 Our revenues, operating expenses, and net operating loss for the three months ended September 30, 2012 were as follows:
 
 Three Months Ended September 30, 2012Revenue

$
-Operating expenses:Consulting


501,923Research and development


4,744General & administrative


4,561Professional fees


19,480Total operating expenses


530,708Interest expense


180,714Amortized finance cost


315,773Net operating loss


(1,027,195
)
  21
 
 Comparison of Operating Results for the Three Months ended September 30, 2012 and 2011
 
 REVENUE AND OPERATING EXPENSES:
 
 For the three months ended September 30, 2012 and 2011, we had no revenues.
 
 As mentioned above, we have tried to minimize our operating expenses. The expenses for the third quarter of 2011 consisted primarily of professional fees and payments to independent contractors.  For the three months ended September 30, 2012 and 2011, our total operating expenses were $530,708 and $484,003, respectively. The majority of the increase in operating expenses was due to increased spending on independent contractors. Despite our focus on negotiating agreements for new business projects and potential investments in our company,  expenditures for professional fees decreased in the third quarter of 2012.To conserve cash, we deferred payments for legal services by issuing warrants.Our total operating expenses for all of 2011 were $5,124,215 which includes a director’s stock compensation expense of $2,650,000 which was rescinded on April 13, 2012.
 
 For the three months ended September 30, 2012, we had a net loss of $1,027,195. For the three months ended September 30, 2011, we incurred a net loss of $484,003.Our net loss for 2011 was $5,124,215including the director’s stock compensation expense.
 
 Our loss per share during the third quarter of 2012 was nominal.  During the third quarter of 2011, it was nominal.
 
 Comparison of the Operating Results for the Nine Months ended September 30, 2012 and from Inception (March 24, 2011) to September 30, 2011
 
 For the nine months ended September 30, 2012 and from inception to September 30, 2011, we had no revenues.
 
 We incurred total operating expenses (income) of ($560,712) for the nine month period ended September 30, 2012, as compared to total operating expenses of $1,763,603 for the period from inception to September 30, 2011.
 
 The decrease in net operating loss for 2012 is due primarily to the offset of the director’s stock compensation of $2,650,000. The $416,550 increase in research and development for 2012 was the result of the move from planning and engineering to actual development and production of our initial conversion. The increased activity was also reflected in the general and administrative costs which rose by $41,221. An increase in fundraising activity resulted in an increase in professional fees of $102,825, otherwise, consulting fees decreased by $25,653. The decrease in consulting fees for the first three quarters of 2012 was due to a move from planning and engineering to production of our initial conversion.
 
 For the nine month period ended September 30, 2012, we incurred a net loss of  $235,758 due to the director’s stock compensation offset , or ($0.00) per share, as compared to a net loss of $1,763,603, or $0.04 per share, for the period from inception to September 30, 2011.
  22
 
 Liquidity and Capital Resources
 
 Introduction
 
 During the three months ended September 30, 2012, because we did not generate any revenues, we had negative operating cash flows.  Our cash on hand as of September 30, 2012 was $19. The cash spent during the quarter came primarily from the issuance of notes payable to a related party and a third party.  Our monthly cash flow burn rate is approximately $85,000.  As a result, we have significant cash needs.  We anticipate that these needs will be satisfied through the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.
 
 Our cash, current assets, total assets, current liabilities, and total liabilities as of September 30, 2012 and December 31, 2011, respectively, are as follows (unaudited):
 
 September 30, 2012


December 31, 2011


ChangeCash

$
19


$
78,361


$
(78,342
)Total Current Assets

$
909,012


$
989,950


$
(80,938
)Total Assets

$
978,769


$
1,034,514


$
(55,745
)Total Current Liabilities

$
1,823,704


$
988,705


$
834,999Total Liabilities

$
1,823,704


$
988,705


$
834,999
 
 Our cash decreased by $78,342 as of September 30, 2012 as compared to December 31, 2011 because of the reduction in loans from related parties.  Our total current assets and total assets decreased by $80,938 and $55,745, respectively, during the same periods, primarily due to the reduction in prepaid expenses for investor relations and communications.
 
 Our current liabilities increased by $834,999 as of September 30, 2012 as compared to December 31, 2011 primarily because of an increase in accounts payable of $272,627,loans payable of $436,222, and accounts payable to a related party of $66,500.  Our total liabilities increased by the same $834,999 for the same reasons.
 
 In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources.  There is no assurance, however, that we will be successful in these efforts.
 
 Cash Requirements
 
 Our cash on hand as of September 30, 2012 was $19.  The cash spent during the quarter came primarily from the issuance of notes payable to a related party and loans. Our monthly cash flow burn rate is approximately $85,000.  As a result, we have significant cash needs.  We anticipate that these needs will be satisfied through the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.
  23
  Sources and Uses of Cash
 
 Operations
 
 Our net cash used by operating activities for the nine month period ended September 30, 2012 was $584,641 which consisted of our net income from operations of ($235,758); stock issued for services of $1,201,520; warrants issued for loan penalty of 68,233; warrants issued for services of $209,258; amortization of financing cost of $513,599, an offset by director’s compensation of $2,650,000; increases in accounts payable and accounts payable related party of $272,627 and $66,500, respectively; and a decrease in accrued interest of $5,380.
 
 Investments
 
 Our net cash used by investing activities for the nine month period ended September 30, 2012 was $25,193 which consisted of payments made for legal services directly related to obtaining patents.
 
 Financing
 
 Our net cash provided by financing activities for the nine month period ended September 30, 2012 was $495,492, which consisted of proceeds from a loan payable of $436,222, proceeds from the sale of common stock of $5,000 and notes payable from related parties of $55,470.
 
 Debt Instruments, Guarantees, and Related Covenants
 
 We have no disclosure required by this Item.
 
 ITEM 3
Quantitative and Qualitative Disclosures About Market Risk
 
 As a smaller reporting company, we are not required to provide the information required by this Item.
 
 ITEM 4
Controls and Procedures
 
 (a)            Evaluation of Disclosure Controls and Procedures
 
 We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a – 15(c) and 15d – 15(e)).  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer, who are our principal executive officer and principal financial officers, respectively, concluded that, as of the end of the three and nine month period endeds September 30, 2012, our disclosure controls and procedures were not effective (1) to ensure that information required to be disclosed by us 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 (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our chief executive and chief financial officers, as appropriate to allow timely decisions regarding required disclosure.  The conclusion reached by our Chief Executive Office and Chief Financial Officer was a result of improvement over the material weaknesses previously reported in our form 10K for the year ended December 31, 2011.
  24
  (b)           Management’s Quarterly Report on Internal Control Over Financial Reporting
 
 A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable probability that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.  Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2012.  Based on this assessment, management believes that any weaknesses that do exist are not significant enough to change the conclusion that, as of September 30, 2012, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:
 
 1.           We do not have sufficient segregation of duties within accounting functions for a company of our size, which is a basic internal control. We use the services of an independent accountant to prepare our financial statements and have engaged a securities attorney to review our filings. Due to our size and nature (a development company with four officers and no employees), segregation of all conflicting duties may not always be possible and may not be economically feasible. We agree that to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.  At such time that additional staff and employees are hired, this requirement will be formally addressed.
 
 2.           While we believe the current internal controls are adequate for a development company with just four officers and no employees, we recognize these policies and procedures need to be documented in a formal manner in order to meet both current reporting requirements and also to handle expected growth when additional staff and employees are added. This requirement will be addressed on a timely basis.
 
 3.           While our Board of Directors does not currently have any independent members, on April 6, 2012, we added a director who qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K.  As of this writing, an audit committee has not been formally established.  Currently, the qualified director works with the external accountant and external audit firm to insure all reporting is accurate.
 
 Management will continue to control and monitor the company to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.  Accordingly, we believe that the consolidated financial statements included in this report are fairly presented, in all material respects, our financial condition, results of operations and cash flows for the periods covered.
 
 (c)           Remediation of Material Weaknesses
  To remediate the weakness in our documentation, evaluation and testing of internal controls, we hope to engage a third-party firm to assist us as soon as we generate revenues that cover more than the Company’s immediate needs.  Because of current financial restraints, we have not started any remediation as of the date hereof.
  25
  (d)           Changes in Internal Control over Financial Reporting
  None
 
 26
 
 PART II – OTHER INFORMATION
 
 ITEM 1                 Legal Proceedings
 
 We are not a party to or otherwise involved in any legal proceedings.
 
 In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions.  The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations.  However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.
 
 ITEM 1A                      Risk Factors
 
 As a smaller reporting company, we are not required to provide the information required by this item.
 
 ITEM 2                 Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 ITEM 3                 Defaults Upon Senior Securities
 
 As of October 24, 2012, the Company is in default to Spirit Bear on the first loan for $100,000. The note was due 180 days after the issuance date which was April 27, 2012.  On  October 26, 2012, the Company reached agreement with Spirit Bear to extend the term of the note to November 30, 2012.See Note 12 – Subsequent Events.
 
 ITEM 4                 Mine Safety Disclosures
 
 Not applicable.
  27
 
 ITEM 5                 Other Information
 
 In April, May, June and July of 2012, Spirit Bear Limited made cash advances for and funded loans to the Company in the total amount of $186,222, creating direct financial obligations of the Company.  On August 8, 2012, The Company and Spirit Bear reached a definitive agreement concerning the terms of the loans, including the Company’s obligations to repay Spirit Bear within 180 days from each date of funding, and the Company’s obligation to issue warrants to Spirit Bear to purchase 3.5714 shares of common stock per dollar of consideration provided by Spirit Bear, subject to certain adjustments, at the per share price of $.35, as partial consideration for the loans. The Company believes Spirit Bear is an accredited investor.
 
 ITEM 6                      Exhibits
 
 (a)           Exhibits
 
 3.1 (1)

Articles of Incorporation for Bibb Corporation3.2 (2)

Amended Articles of Incorporation for Bibb Corporation dated September 3, 20103.3

Certificate of Amendment to Articles of Incorporation filed April 5, 20123.4 (1)

Bylaws of Bibb Corporation3.5 (3)

Bylaw Amendments10.1

Consulting Agreement with Lagoon Labs, LLC dated February 13, 201210.2

Warrant issued to McMahon, Serepca LLP for financial accommodations dated June 4, 2012.10.3

Spirit Bear Note and Warrant Purchase Agreement dated August

9, 2012.10.4

Spirit Bear Promissory Note B-1 issued pursuant to the Note and Warrant Purchase Agreement and dated April 27, 2012.10.5

Spirit Bear Promissory Note B-2 issued pursuant to the Note and Warrant Purchase Agreement and dated May 22, 2012.10.6

Spirit Bear Promissory Note B-3 issued pursuant to the Note and Warrant Purchase Agreement and dated June 28, 2012.10.7

Spirit Bear Promissory Note B-4 issued pursuant to the Note and Warrant Purchase Agreement and dated July 11, 2012.10.8

Spirit Bear Loan Extension Agreement for Note B-1 dated October 26, 2012.31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1

Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Chief Financial Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
Incorporated by reference from our Registration Statement on SB-2 filed with the Commission on August 9, 2007.
 
 (2)
Incorporated by reference from our Current Report on Form 8-K filed with the Commission on September 9, 2009.
 
 (3)
Incorporated by reference from our Current Report on Form 8-K filed with the Commission on April 11, 2012.
  28
 
 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.
 
 
 HPEV, Inc.Dated:  November 19, 2012
/s/  Timothy HassettBy:           Timothy HassettIts:           Chief Executive Officer