Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 12, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Energie Holdings, Inc. | ' |
Entity Central Index Key | '0000774937 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 51,816,667 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Balance_Sheets_Unaudited
Balance Sheets (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current assets: | ' | ' |
Cash and cash equivalents | $18,304 | $37,874 |
Accounts receivable, net | 55,606 | 49,637 |
Inventory | 392,831 | 414,308 |
Prepaid expenses and other | 14,869 | 15,922 |
Total current assets | 481,610 | 517,741 |
Noncurrent assets: | ' | ' |
Intangible assets, net | 996,478 | 1,119,550 |
Property and equipment, net | 4,928 | 23,421 |
Other assets | 14,695 | 11,695 |
Total noncurrent assets | 1,016,101 | 1,154,666 |
Total assets | 1,497,711 | 1,672,407 |
Current liabilities: | ' | ' |
Accounts payable | 2,046,852 | 595,202 |
Commissions payable | 91,580 | 91,967 |
Debt | 4,577,115 | 3,981,932 |
Total current liabilities | 6,715,547 | 4,669,101 |
Commitments and contingencies (Note 6) | ' | ' |
Equity: | ' | ' |
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2014 or December 31, 2013 | ' | ' |
Common stock, $.0001 par value; 250,000,000 shares authorized; 51,816,667 shares issued and outstanding at September 30, 2014 | 524,604 | ' |
Additional paid-in capital | 1,320,000 | ' |
Accumulated deficit | -7,062,440 | ' |
Members deficit (Energie LLC) | ' | -2,996,694 |
Total deficit | -5,217,836 | -2,996,694 |
Total liabilities and equity | $1,497,711 | $1,672,407 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 51,816,667 | ' |
Common stock, shares outstanding | 51,816,667 | ' |
Statements_of_Operations_Unaud
Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Sales revenue | $248,549 | $197,656 | ' | ' |
Cost of goods sold | -136,377 | -93,503 | -302,191 | -672,088 |
Gross profit | 112,172 | 104,153 | 285,729 | 881,853 |
Operating expenses: | ' | ' | ' | ' |
Compensation | 208,456 | 127,144 | 463,025 | 480,240 |
Commissions | 45,376 | 21,491 | 93,306 | 346,259 |
Depreciation and amortization | 39,536 | 61,705 | 166,662 | 160,270 |
General and administrative | 433,373 | 284,883 | 1,114,656 | 666,491 |
Total operating expenses | 726,741 | 495,223 | 1,837,649 | 1,653,260 |
Loss from operations | -614,569 | -391,070 | -1,551,920 | -771,407 |
Other income (expense): | ' | ' | ' | ' |
Interest expense | -104,429 | -22,144 | -284,406 | -88,764 |
Other income | 43,305 | 80,465 | 115,394 | 55,385 |
Other income (expense), net | -61,124 | 58,321 | -169,012 | -33,379 |
Net loss | ($675,693) | ($332,749) | ($1,720,932) | ($804,786) |
Net loss per common share (Note 8): Basic and diluted | ($0.01) | ($0.01) | ($0.06) | ($0.03) |
Weighted average common shares outstanding: Basic and diluted | 50,705,662 | 50,705,662 | 29,979,721 | 29,979,721 |
Statements_of_Cash_Flows_Unaud
Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Operating Activities: | ' | ' |
Net loss | ($1,720,932) | ($804,786) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ' | ' |
Depreciation and amortization | 166,662 | 160,270 |
Unpaid interest | 284,406 | 88,764 |
Changes in operating assets and liabilities (net of Share Exchange): | ' | ' |
Accounts receivable | -5,969 | 279,222 |
Inventory | 21,477 | -10,717 |
Prepaid expenses | 1,053 | 26,980 |
Accounts payable | 1,087,974 | 360,799 |
Commissions payable | -387 | -12,909 |
Unearned income | ' | -54,802 |
Net cash (used in) provided by operating activities | -165,716 | 32,821 |
Investing Activities: | ' | ' |
Intangible assets | -25,097 | ' |
Net cash used in investing activities | -25,097 | ' |
Financing Activities: | ' | ' |
Proceeds from notes payable | 307,777 | ' |
Member activity | -136,534 | -54,589 |
Net cash provided by (used in) financing activities | 171,243 | -54,589 |
Net change in cash | -19,570 | -21,768 |
Cash, beginning of period | 37,874 | 59,171 |
Cash, end of period | $18,304 | $37,403 |
1_Description_of_Business_and_
1. Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
1. Description of Business and Summary of Significant Accounting Policies | ' |
Note 1 — Description of Business and Summary of Significant Accounting Policies | |
Formation of the Company | |
On December 31, 2013, Energie Holdings, Inc. (“we,” “us,” “our,” the “Company”, “Energie” or “Holdings”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with OELC, LLC, a Delaware limited liability company, and its wholly-owned subsidiary, Energie LLC (hereinafter jointly referred to as, “Energie”). The Share Exchange Agreement was not effective until July 2, 2014, due to a variety of conditions subsequent that needed to be met which were met or waived. Upon effectiveness, Holdings issued 33,000,000 “restricted” shares of its common stock, representing approximately 65% of the then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Energie. This transaction is considered to be a capital transaction, rather than a business combination, equivalent to the issuance of ownership interests by Energie for the net assets of Holdings, accompanied by a recapitalization (the “Share Exchange”). The accounting is identical to that resulting from a reverse acquisition, except that no goodwill or other intangible is recorded. | |
Thereafter, on January 27, 2014, Holdings entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two of its then wholly owned subsidiaries, Energie Holdings and Alas Acquisition Company (“Alas”). The Merger Agreement effectively merged Alas with and into Holdings, with Holdings being the surviving corporation. The net effect of the Merger Agreement was to effectuate a name change from Alas Aviation Corp., to Energie Holdings, Inc. in order to provide a better understanding to investors of the Company’s entry into the LED lighting industry. The Company’s management also changed. | |
Description of Business | |
We are focused on acquiring and growing specialized LED lighting companies for the architecture and interior design markets for both commercial and residential applications. The lighting products include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Our objective is to grow, innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lighting. | |
Énergie was founded in 2001 and is engaged in the import and sale of specialized interior lighting solutions to the architecture and interior design markets in North America. Our headquarters is located in Wheat Ridge, Colorado, and we also maintain a production and assembly facility in Zeeland, Michigan. | |
Basis of Presentation | |
As a result of the Share Exchange, Energie is considered to be the “accounting acquirer” and, accordingly, is treated as the predecessor company. The condensed consolidated financial statements include the results of operations and financial position of Energie for all periods, and the results of operations and financial position of Holdings as of and for the three months ended September 30, 2014. | |
The accompanying condensed consolidated balance sheet as of December 31, 2013, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-KT for the period ended December 31, 2013, and Exhibit 99.1 to our Current Report on Form 8-K/A filed on October 3, 2014. | |
Going Concern | |
As shown in the accompanying financial statements, we had an equity deficit of $5,217,836 and a working capital deficit of $6,233,937 as of September 30, 2014, and have reported net losses of $1,720,932 and $804,786 for the nine months ended September 30, 2014 and 2013, respectively. These factors raise substantial doubt regarding our ability to continue as a going concern. | |
Our ability to continue as a going concern is dependent on our ability to further implement our business plan, attract additional capital and, ultimately, upon our ability to develop future profitable operations. We intend to fund our business development, acquisition endeavors and operations through equity and debt financing arrangements. However, there can be no assurance that these arrangements will be sufficient to fund our ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time. These matters raise substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Additionally, current economic conditions in the United States and globally create significant challenges attaining sufficient funding | |
Although we are past due on our required payments under our debt agreements, the lenders have not made demand for repayment of the principal and interest due. If demand for payment is made by one or multiple vendors, we would experience a liquidity issue as we do not currently have the funds available to pay off these debts. We intend to enter into extension/forbearance agreements with each of the lenders; however, there can be no assurances that any of the lenders will be cooperative or that if they are willing to provide extensions or forbearances, that the terms under which they may be willing to provide them will be favorable to us. | |
Reclassifications | |
Certain prior year amounts have been reclassified to conform with the current year presentation. | |
Recently Issued Accounting Pronouncements | |
In August 2014, the FASB issued ASU No. 2014-13 (ASU 2014-13), Consolidation (Topic 810) – Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. ASU 2014-13 provides an entity that consolidates a collateralized financing entity (“CFE”) that had elected the fair value option for the financial assets and financial liabilities of such CFE an alternative to current fair value measurement guidance. We do not expect the impact of the adoption of ASU 2014-13 to be material to our consolidated financial statements. | |
In August 2014, the FASB issued ASU No. 2014-14 (ASU 2014-14), Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40) – Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. ASU 2014-14 will require creditors to derecognize certain foreclosed government-guaranteed mortgage loans and to recognize a separate other receivable that is measured at the amount the creditor expects to recover from the guarantor, and to treat the guarantee and the receivable as a single unit of account. We do not expect the impact of the adoption of ASU 2014-14 to be material to our consolidated financial statements. | |
In August 2014, FASB issued ASU No. 2014-15 (ASU 2014-15), Presentation of Financial Statements - Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 will explicitly require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15. |
2_Recapitalization
2. Recapitalization | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Equity [Abstract] | ' | ||||||||
2. Recapitalization | ' | ||||||||
Note 2 — Recapitalization | |||||||||
On July 2, 2014, we completed the Share Exchange Agreement with Energie. The impact to equity of the Share Exchange includes a) the issuance of 33,000,000 shares of Holdings’ common stock at $0.05 per share, the closing price of Holdings’ stock on December 31, 2013, the date of the Share Exchange Agreement, for total consideration effectively transferred of $1,650,000; and b) removing Holdings’ accumulated deficit and adjusting equity for the recapitalization. | |||||||||
The accompanying condensed consolidated statements of operations include the results of the Share Exchange Agreement from the share exchange date of July 2, 2014. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2014 and 2013, are as follows: | |||||||||
Nine months ended September 30, | |||||||||
2014 | 2013 | ||||||||
Pro forma results: | |||||||||
Total net revenues | $ | 587,920 | $ | 1,553,941 | |||||
Net loss | (1,994,849 | ) | (929,804 | ) | |||||
Net loss per common share: | |||||||||
Basic and diluted | $ | (0.07 | ) | $ | (0.03 | ) | |||
The assets and liabilities of Holdings on the effective date of the Share Exchange Agreement were as follows: | |||||||||
Accounts payable | $ | 363,676 | |||||||
Preferred stock | — | ||||||||
Common stock | 194,604 | ||||||||
Additional paid-in capital | 91,046,859 | ||||||||
Accumulated deficit | (91,605,139 | ) | |||||||
Total stockholders’ deficit | $ | (363,676 | ) | ||||||
3_Accounts_receivable
3. Accounts receivable | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
3. Accounts receivable | ' | ||||||||
Note 3 — Accounts receivable | |||||||||
The following is a summary of accounts receivable: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Customer receivables, factored | $ | 43,750 | $ | 37,874 | |||||
Customer receivables, unfactored | 11,856 | 11,763 | |||||||
$ | 55,606 | $ | 49,637 | ||||||
4_Inventory
4. Inventory | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
4. Inventory | ' | ||||||||
Note 4 — Inventory | |||||||||
The following is a summary of inventory: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Raw materials | $ | 397,319 | $ | 418,796 | |||||
Less: reserve | (4,488 | ) | (4,488 | ) | |||||
$ | 392,831 | $ | 414,308 |
5_Debt
5. Debt | 9 Months Ended | ||||||||||||||
Sep. 30, 2014 | |||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||
5. Debt | ' | ||||||||||||||
Note 5 — Debt | |||||||||||||||
Debt is comprised of the following: | |||||||||||||||
Description | Note | September 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||||
Line of credit | A | $ | 47,000 | $ | 47,000 | ||||||||||
Accounts receivable factoring | B | 29,379 | 52,530 | ||||||||||||
Note payable to distribution partner | C | 530,347 | 550,347 | ||||||||||||
Related party debt | D | 3,515,440 | 3,110,889 | ||||||||||||
Other notes payable | E | 361,949 | 221,166 | ||||||||||||
Convertible promissory notes | F | 93,000 | — | ||||||||||||
$ | 4,577,115 | $ | 3,981,932 | ||||||||||||
A – Line of Credit – We utilized this bank line of credit for working capital purposes. The outstanding obligation is due on demand, has a stated initial interest rate of 10.5% that is subject to adjustment, and is guaranteed by our majority shareholder. | |||||||||||||||
B – Accounts Receivable Factoring – Pursuant to factoring and security agreement, we submit accounts receivable for sale to a factoring firm at an amount equal to their face value, less a 1.5% commission and an initial factoring fee based on the prime interest rate plus 3%. The factor advances a percent of the account balance to us, and the remaining amount will be withheld in a non-interest bearing reserve account. Accounts purchased by the factor are with full recourse with us within 120 days from the invoices date. The factoring transaction is treated as a loan, with the receivables used as collateral. We have granted the factoring firm a security interest in, and a blanket lien upon our assets. | |||||||||||||||
C – Note Payable to Distribution Partner – Represents the outstanding principal balance plus 5% annual interest due on a 2007 promissory note with 5% annual interest, between us and a significant European distribution partner. Although we are past due on required payments, the loan holder has not made any demand for repayment of the principal and interest due. | |||||||||||||||
D –Related Parties Debt – Amounts due to lenders having an ownership interest in Holdings. These loans are not collateralized. All have been renegotiated to have a maturity of December 31, 2014. The following summarizes the terms and balances of the related party notes: | |||||||||||||||
30-Sep-14 | 31-Dec-13 | Interest Rate | |||||||||||||
D1 | $ | 2,689,086 | $ | 2,413,752 | 6 | % | |||||||||
D2 | 357,010 | 306,946 | 12 | % | |||||||||||
D3 | 176,367 | 173,367 | — | ||||||||||||
D4 | 164,620 | 103,500 | 24 | % | |||||||||||
D3 | 90,697 | 81,697 | 24 | % | |||||||||||
D3 | 23,161 | 20,000 | 24 | % | |||||||||||
D3 | 10,000 | 10,000 | 24 | % | |||||||||||
D5 | 4,499 | 1,627 | — | ||||||||||||
Total | $ | 3,515,440 | $ | 3,110,889 | |||||||||||
D1 -- Holds the largest ownership percentage in Holdings, and we also incur approximately $150,000 annually for rent expense with them. According to the note agreement, the note holder may, at its option at any time after default, proceed to convert any remaining balance of the notes to equity at a rate equal to the proportion of the remaining balance of the note divided by $4,000,000 enterprise value. The note was considered to be in default as of March 31, 2014; therefore, the note holder has the right to exercise the conversion option, but has not yet elected to do so. | |||||||||||||||
We evaluated the agreement for derivatives and determined that it does not qualify for derivative treatment for financial reporting purposes, because the agreement relates to our own equity, and the debt and the equity are not closely related. We also determined this does not qualify as a beneficial conversion feature. Accordingly, the balance is reported at the carrying amount. | |||||||||||||||
D2 – Owns our common stock and is also an executive vice president. | |||||||||||||||
D3 – Holds our common stock, without any other involvement in the Company. | |||||||||||||||
D4 -- The spouse of our CEO. | |||||||||||||||
D5 – Owns our common stock and is also a vice president. | |||||||||||||||
E – Other Notes Payable – Represents the outstanding principal balance plus interest due on three separate promissory notes with interest rates ranging from 8% to 24% annually. Although we are past due on our required payments, the loan holders have not made demand for repayment of the principal and interest due. In the event we receive proceeds as the beneficiary of a life insurance policy covering our majority shareholder, repayment of principal and interest is due on these notes prior to using the proceeds for any other purpose. | |||||||||||||||
F – Convertible promissory notes – Represents the outstanding principal balance on two separate convertible promissory notes with interest of 8% annually, due June 2015. At the option of the holder, the notes may be settled in cash or converted into shares of our common stock at any time beginning 180 days from the date of the notes at a price equal to 61% of the average closing bid price of our common stock during the 10 trading days immediately preceding the date of conversion. In the event we fail to pay the notes when they become due, the balance due under the notes incurs interest at the rate of 22% per annum. The notes contain additional terms and conditions normally included in instruments of this kind, including a right of first refusal wherein we have granted the holders the right to match the terms of any future financing in which we engage on the same terms and contemplated in such future financing. We estimate that the fair value of the convertible debt approximates the face value, so no value has been assigned to the beneficial conversion feature. | |||||||||||||||
All of our debt is reflected as a current liability due to either having a maturity date within one year, or because it is past due. |
6_Contingencies
6. Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
6. Contingencies | ' |
Note 6 — Contingencies | |
Current management discovered that the Company’s former management recorded various obligations to itself and to third parties for expenditures not deemed benefitting the Company or authorized by the Company’s sole director, as required. The amount of these unauthorized expenditures totaled $91,172, including $60,000 in management fees. These expenditures were reversed and are not part of the accompanying financial statements. While current management believes that none of the $91,172 is an obligation of ours, it is not known what representations were made to these vendors or whether we could, in fact, be eventually responsible to pay some or all of the indicated amount. |
7_Subsequent_Events
7. Subsequent Events | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
7. Subsequent Events | ' |
Note 7 — Subsequent Events | |
There are no events subsequent to September 30, 2014 and up to the date of this filing that would require disclosure. |
8_Net_Loss_Per_Share
8. Net Loss Per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
8. Net Loss Per Share | ' | ||||||||||||||||
Note 8 – Net Loss Per Share | |||||||||||||||||
Basic net loss per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted net loss per share is computed similarly to basic net loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised. Since Energie, the “predecessor company,” was an LLC, it did not have common shares outstanding prior to the Share Exchange on July 2, 2014. Accordingly, we have prepared the calculation of Net Loss Per Share using the weighted-average number of common shares of Holdings that were outstanding during the three and nine months ended September 30, 2014. Additionally, Holdings did not exist in 2013, so we have used the weighted-average number of common shares of Holdings that were outstanding for the three and nine months ended September 30, 2014, so that a comparison of net loss per share may be presented. | |||||||||||||||||
The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted: | |||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net loss | $ | (675,693 | ) | $ | (332,749 | ) | $ | (1,720,932 | ) | $ | (804,786 | ) | |||||
Weighted average outstanding shares of common stock | 50,705,662 | 50,705,662 | 29,979,721 | 29,979,721 | |||||||||||||
Dilutive effect of stock options and warrants | — | — | — | — | |||||||||||||
Common stock and equivalents | 50,705,662 | 50,705,662 | 29,979,721 | 29,979,721 | |||||||||||||
Net loss per share – Basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.06 | ) | $ | (0.03 | ) | |||||
There are no dilutive instruments outstanding during the three and nine months ended September 30, 2014. |
1_Description_of_Business_and_1
1. Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Formation of the Company | ' |
Formation of the Company | |
On December 31, 2013, Energie Holdings, Inc. (“we,” “us,” “our,” the “Company”, “Energie” or “Holdings”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with OELC, LLC, a Delaware limited liability company, and its wholly-owned subsidiary, Energie LLC (hereinafter jointly referred to as, “Energie”). The Share Exchange Agreement was not effective until July 2, 2014, due to a variety of conditions subsequent that needed to be met which were met or waived. Upon effectiveness, Holdings issued 33,000,000 “restricted” shares of its common stock, representing approximately 65% of the then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Energie. This transaction is considered to be a capital transaction, rather than a business combination, equivalent to the issuance of ownership interests by Energie for the net assets of Holdings, accompanied by a recapitalization (the “Share Exchange”). The accounting is identical to that resulting from a reverse acquisition, except that no goodwill or other intangible is recorded. | |
Thereafter, on January 27, 2014, Holdings entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two of its then wholly owned subsidiaries, Energie Holdings and Alas Acquisition Company (“Alas”). The Merger Agreement effectively merged Alas with and into Holdings, with Holdings being the surviving corporation. The net effect of the Merger Agreement was to effectuate a name change from Alas Aviation Corp., to Energie Holdings, Inc. in order to provide a better understanding to investors of the Company’s entry into the LED lighting industry. The Company’s management also changed. | |
Description of Business | ' |
Description of Business | |
We are focused on acquiring and growing specialized LED lighting companies for the architecture and interior design markets for both commercial and residential applications. The lighting products include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Our objective is to grow, innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lighting. | |
Énergie was founded in 2001 and is engaged in the import and sale of specialized interior lighting solutions to the architecture and interior design markets in North America. Our headquarters is located in Wheat Ridge, Colorado, and we also maintain a production and assembly facility in Zeeland, Michigan. | |
Basis of Presentation | ' |
Basis of Presentation | |
As a result of the Share Exchange, Energie is considered to be the “accounting acquirer” and, accordingly, is treated as the predecessor company. The condensed consolidated financial statements include the results of operations and financial position of Energie for all periods, and the results of operations and financial position of Holdings as of and for the three months ended September 30, 2014. | |
The accompanying condensed consolidated balance sheet as of December 31, 2013, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-KT for the period ended December 31, 2013, and Exhibit 99.1 to our Current Report on Form 8-K/A filed on October 3, 2014. | |
Going Concern | ' |
Going Concern | |
As shown in the accompanying financial statements, we had an equity deficit of $5,217,836 and a working capital deficit of $6,233,937 as of September 30, 2014, and have reported net losses of $1,720,932 and $804,786 for the nine months ended September 30, 2014 and 2013, respectively. These factors raise substantial doubt regarding our ability to continue as a going concern. | |
Our ability to continue as a going concern is dependent on our ability to further implement our business plan, attract additional capital and, ultimately, upon our ability to develop future profitable operations. We intend to fund our business development, acquisition endeavors and operations through equity and debt financing arrangements. However, there can be no assurance that these arrangements will be sufficient to fund our ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time. These matters raise substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Additionally, current economic conditions in the United States and globally create significant challenges attaining sufficient funding | |
Although we are past due on our required payments under our debt agreements, the lenders have not made demand for repayment of the principal and interest due. If demand for payment is made by one or multiple vendors, we would experience a liquidity issue as we do not currently have the funds available to pay off these debts. We intend to enter into extension/forbearance agreements with each of the lenders; however, there can be no assurances that any of the lenders will be cooperative or that if they are willing to provide extensions or forbearances, that the terms under which they may be willing to provide them will be favorable to us. | |
Reclassifications | ' |
Reclassifications | |
Certain prior year amounts have been reclassified to conform with the current year presentation. | |
Recently Issued Accounting Pronouncements | ' |
Recently Issued Accounting Pronouncements | |
In August 2014, the FASB issued ASU No. 2014-13 (ASU 2014-13), Consolidation (Topic 810) – Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. ASU 2014-13 provides an entity that consolidates a collateralized financing entity (“CFE”) that had elected the fair value option for the financial assets and financial liabilities of such CFE an alternative to current fair value measurement guidance. We do not expect the impact of the adoption of ASU 2014-13 to be material to our consolidated financial statements. | |
In August 2014, the FASB issued ASU No. 2014-14 (ASU 2014-14), Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40) – Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. ASU 2014-14 will require creditors to derecognize certain foreclosed government-guaranteed mortgage loans and to recognize a separate other receivable that is measured at the amount the creditor expects to recover from the guarantor, and to treat the guarantee and the receivable as a single unit of account. We do not expect the impact of the adoption of ASU 2014-14 to be material to our consolidated financial statements. | |
In August 2014, FASB issued ASU No. 2014-15 (ASU 2014-15), Presentation of Financial Statements - Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 will explicitly require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15. |
2_Recapitalization_Tables
2. Recapitalization (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Equity [Abstract] | ' | ||||||||
Pro Forma Results of Acquisition | ' | ||||||||
Nine months ended September 30, | |||||||||
2014 | 2013 | ||||||||
Pro forma results: | |||||||||
Total net revenues | $ | 587,920 | $ | 1,553,941 | |||||
Net loss | (1,994,849 | ) | (929,804 | ) | |||||
Net loss per common share: | |||||||||
Basic and diluted | $ | (0.07 | ) | $ | (0.03 | ) | |||
Assets and Liabilities of Holdings | ' | ||||||||
Accounts payable | $ | 363,676 | |||||||
Preferred stock | — | ||||||||
Common stock | 194,604 | ||||||||
Additional paid-in capital | 91,046,859 | ||||||||
Accumulated deficit | (91,605,139 | ) | |||||||
Total stockholders’ deficit | $ | (363,676 | ) |
3_Accounts_receivable_Tables
3. Accounts receivable (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
Accounts Receivable | ' | ||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Customer receivables, factored | $ | 43,750 | $ | 37,874 | |||||
Customer receivables, unfactored | 11,856 | 11,763 | |||||||
$ | 55,606 | $ | 49,637 |
4_Inventory_Tables
4. Inventory (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventory | ' | ||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Raw materials | $ | 397,319 | $ | 418,796 | |||||
Less: reserve | (4,488 | ) | (4,488 | ) | |||||
$ | 392,831 | $ | 414,308 |
5_Debt_Tables
5. Debt (Tables) | 9 Months Ended | ||||||||||||||
Sep. 30, 2014 | |||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||
Debt | ' | ||||||||||||||
Description | Note | September 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||||
Line of credit | A | $ | 47,000 | $ | 47,000 | ||||||||||
Accounts receivable factoring | B | 29,379 | 52,530 | ||||||||||||
Note payable to distribution partner | C | 530,347 | 550,347 | ||||||||||||
Related party debt | D | 3,515,440 | 3,110,889 | ||||||||||||
Other notes payable | E | 361,949 | 221,166 | ||||||||||||
Convertible promissory notes | F | 93,000 | — | ||||||||||||
$ | 4,577,115 | $ | 3,981,932 | ||||||||||||
Related Party Debt | ' | ||||||||||||||
30-Sep-14 | 31-Dec-13 | Interest Rate | |||||||||||||
D1 | $ | 2,689,086 | $ | 2,413,752 | 6 | % | |||||||||
D2 | 357,010 | 306,946 | 12 | % | |||||||||||
D3 | 176,367 | 173,367 | — | ||||||||||||
D4 | 164,620 | 103,500 | 24 | % | |||||||||||
D3 | 90,697 | 81,697 | 24 | % | |||||||||||
D3 | 23,161 | 20,000 | 24 | % | |||||||||||
D3 | 10,000 | 10,000 | 24 | % | |||||||||||
D5 | 4,499 | 1,627 | — | ||||||||||||
Total | $ | 3,515,440 | $ | 3,110,889 |
8_Net_Loss_Per_Share_Tables
8. Net Loss Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Net Loss Per Share | ' | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net loss | $ | (675,693 | ) | $ | (332,749 | ) | $ | (1,720,932 | ) | $ | (804,786 | ) | |||||
Weighted average outstanding shares of common stock | 50,705,662 | 50,705,662 | 29,979,721 | 29,979,721 | |||||||||||||
Dilutive effect of stock options and warrants | — | — | — | — | |||||||||||||
Common stock and equivalents | 50,705,662 | 50,705,662 | 29,979,721 | 29,979,721 | |||||||||||||
Net loss per share – Basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.06 | ) | $ | (0.03 | ) |
1_Description_of_Business_and_2
1. Description of Business and Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' | ' | ' | ' | ' |
Restricted Shares Issued in Share Exchange Agreement | ' | ' | ' | ' | 33,000,000 |
Equity Deficit | ($5,217,836) | ' | ($5,217,836) | ' | ($2,996,694) |
Working Capital Deficit | 6,233,937 | ' | 6,233,937 | ' | ' |
Net Income Loss | ($675,693) | ($332,749) | ($1,720,932) | ($804,786) | ' |
2_Recapitalization_Pro_Forma_R
2. Recapitalization - Pro Forma Results of Acquisition (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Total net revenues | $248,549 | $197,656 | ' | ' |
Net loss | -675,693 | -332,749 | -1,720,932 | -804,786 |
Net loss per common share: | ' | ' | ' | ' |
Basic and diluted | ($0.01) | ($0.01) | ($0.06) | ($0.03) |
Pro Forma [Member] | ' | ' | ' | ' |
Total net revenues | ' | ' | 587,920 | 1,553,941 |
Net loss | ' | ' | ($1,994,849) | ($929,804) |
Net loss per common share: | ' | ' | ' | ' |
Basic and diluted | ' | ' | ($0.07) | ($0.03) |
2_Recapitalization_Assets_and_
2. Recapitalization - Assets and Liabilities of Holdings (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Preferred stock | ' | ' |
Common stock | 524,604 | ' |
Additional paid-in capital | 1,320,000 | ' |
Total stockholders deficit | -5,217,836 | -2,996,694 |
Pro Forma [Member] | ' | ' |
Accounts payable | 363,676 | ' |
Preferred stock | ' | ' |
Common stock | 194,604 | ' |
Additional paid-in capital | 91,046,859 | ' |
Accumulated deficit | -91,605,139 | ' |
Total stockholders deficit | ($363,676) | ' |
2_Recapitalization_Details_Nar
2. Recapitalization (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Equity [Abstract] | ' |
Restricted Shares Issued in Share Exchange Agreement | 33,000,000 |
Consideration Received in Share Exchange Agreement | $1,650,000 |
3_Accounts_receivable_Accounts
3. Accounts receivable - Accounts Receivable (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Receivables [Abstract] | ' | ' |
Customer receivables, factored | $43,750 | $37,874 |
Customer receivables, unfactored | 11,856 | 11,763 |
Accounts Receivable | $55,606 | $49,637 |
4_Inventory_Inventory_Details
4. Inventory - Inventory (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Raw materials | $397,319 | $418,796 |
Less: reserve | -4,488 | -4,488 |
Inventory | $392,831 | $414,308 |
5_Debt_Debt_Details
5. Debt - Debt (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
Debt Disclosure [Abstract] | ' | ' | ||
Line of credit | $47,000 | [1] | $47,000 | [1] |
Accounts receivable factoring | 29,379 | [2] | 52,530 | [2] |
Note payable to distribution partner | 530,347 | [3] | 550,347 | [3] |
Related party debt | 3,515,440 | [4] | 3,110,889 | [4] |
Other notes payable | 361,949 | [5] | 221,166 | [5] |
Convertible promissory notes | 93,000 | [6] | ' | [6] |
Debt | $4,577,115 | $3,981,932 | ||
[1] | A - Line of Credit - We utilized this bank line of credit for working capital purposes. The outstanding obligation is due on demand, has a stated initial interest rate of 10.5% that is subject to adjustment, and is guaranteed by our majority shareholder. | |||
[2] | B - Accounts Receivable Factoring - Pursuant to factoring and security agreement, we submit accounts receivable for sale to a factoring firm at an amount equal to their face value, less a 1.5% commission and an initial factoring fee based on the prime interest rate plus 3%. The factor advances a percent of the account balance to us, and the remaining amount will be withheld in a non-interest bearing reserve account. Accounts purchased by the factor are with full recourse with us within 120 days from the invoices date. The factoring transaction is treated as a loan, with the receivables used as collateral. We have granted the factoring firm a security interest in, and a blanket lien upon our assets. | |||
[3] | C - Note Payable to Distribution Partner - Represents the outstanding principal balance plus 5% annual interest due on a 2007 promissory note with 5% annual interest, between us and a significant European distribution partner. Although we are past due on required payments, the loan holder has not made any demand for repayment of the principal and interest due. | |||
[4] | D - Related Parties Debt - Amounts due to lenders having an ownership interest in Holdings. These loans are not collateralized. All have been renegotiated to have a maturity of December 31, 2014. The following summarizes the terms and balances of the related party notes: | |||
[5] | E - Other Notes Payable - Represents the outstanding principal balance plus interest due on three separate promissory notes with interest rates ranging from 8% to 24% annually. Although we are past due on our required payments, the loan holders have not made demand for repayment of the principal and interest due. In the event we receive proceeds as the beneficiary of a life insurance policy covering our majority shareholder, repayment of principal and interest is due on these notes prior to using the proceeds for any other purpose. | |||
[6] | F - Convertible promissory notes - Represents the outstanding principal balance on two separate convertible promissory notes with interest of 8% annually, due June 2015. At the option of the holder, the notes may be settled in cash or converted into shares of our common stock at any time beginning 180 days from the date of the notes at a price equal to 61% of the average closing bid price of our common stock during the 10 trading days immediately preceding the date of conversion. In the event we fail to pay the notes when they become due, the balance due under the notes incurs interest at the rate of 22% per annum. The notes contain additional terms and conditions normally included in instruments of this kind, including a right of first refusal wherein we have granted the holders the right to match the terms of any future financing in which we engage on the same terms and contemplated in such future financing. We estimate that the fair value of the convertible debt approximates the face value, so no value ha |
5_Debt_Related_Party_Debt_Deta
5. Debt - Related Party Debt (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
Related party debt | $3,515,440 | $3,110,889 | ||
D1 | ' | ' | ||
Related party debt | 2,689,086 | [1] | 2,413,752 | [1] |
Related party debt, interest rate | 6.00% | ' | ||
D2 | ' | ' | ||
Related party debt | 357,010 | [2] | 306,946 | [2] |
Related party debt, interest rate | 12.00% | ' | ||
D3a | ' | ' | ||
Related party debt | 176,367 | [3] | 173,367 | [3] |
Related party debt, interest rate | ' | ' | ||
D4 | ' | ' | ||
Related party debt | 164,620 | [4] | 103,500 | [4] |
Related party debt, interest rate | 24.00% | ' | ||
D3b | ' | ' | ||
Related party debt | 90,697 | [3] | 81,697 | [3] |
Related party debt, interest rate | 24.00% | ' | ||
D3c | ' | ' | ||
Related party debt | 23,161 | [3] | 20,000 | [3] |
Related party debt, interest rate | 24.00% | ' | ||
D3d | ' | ' | ||
Related party debt | 10,000 | [3] | 10,000 | [3] |
Related party debt, interest rate | 24.00% | ' | ||
D5 | ' | ' | ||
Related party debt | $4,499 | [5] | $1,627 | [5] |
Related party debt, interest rate | ' | ' | ||
[1] | D1 - Holds the largest ownership percentage in Holdings, and we also incur approximately $150,000 annually for rent expense with them. According to the note agreement, the note holder may, at its option at any time after default, proceed to convert any remaining balance of the notes to equity at a rate equal to the proportion of the remaining balance of the note divided by $4,000,000 enterprise value. The note was considered to be in default as of March 31, 2014, therefore, the note holder has the right to exercise the conversion option, but has not yet elected to do so. We evaluated the agreement for derivatives and determined that it does not qualify for derivative treatment for financial reporting purposes, because the agreement relates to our own equity, and the debt and the equity are not closely related. We also determined this does not qualify as a beneficial conversion feature. Accordingly, the balance is reported at the carrying amount. | |||
[2] | D2 - Owns our common stock and is also an executive vice president. | |||
[3] | D3 - Holds our common stock, without any other involvement in the Company. | |||
[4] | D4 - The spouse of our CEO. | |||
[5] | D5 - Owns our common stock and is also a vice president. |
6_Contingencies_Details_Narrat
6. Contingencies (Details Narrative) (USD $) | Sep. 30, 2014 |
Commitments and Contingencies Disclosure [Abstract] | ' |
Unauthorized Expenditures | $91,172 |
Unauthorized Management Fees | $60,000 |
8_Net_Loss_Per_Share_Net_Loss_
8. Net Loss Per Share - Net Loss Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Net loss | ($675,693) | ($332,749) | ($1,720,932) | ($804,786) |
Weighted average outstanding shares of common stock | 50,705,662 | 50,705,662 | 29,979,721 | 29,979,721 |
Dilutive effect of stock options and warrants | ' | ' | ' | ' |
Common stock and equivalents | 50,705,662 | 50,705,662 | 29,979,721 | 29,979,721 |
Net loss per share b Basic and diluted | ($0.01) | ($0.01) | ($0.06) | ($0.03) |