Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 06, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Energie Holdings, Inc. | |
Entity Central Index Key | 774,937 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
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 | 100,107,673 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 3,427 | $ 43,879 |
Accounts receivable, net | 15,250 | 27,337 |
Inventory, net | 233,422 | 248,662 |
Prepaid expenses and other | 50,331 | 68,291 |
Total current assets | 302,430 | 388,169 |
Noncurrent assets: | ||
Other assets | 112,705 | 22,611 |
Total noncurrent assets | 112,705 | 22,611 |
Total assets | 415,135 | 410,780 |
Current liabilities: | ||
Accounts payable | 2,361,152 | 2,228,645 |
Accrued liabilities | 916,164 | 572,973 |
Debt, current portion, net of discount | 4,529,439 | 2,373,307 |
Total current liabilities | 7,806,755 | 5,174,925 |
Debt, long-term portion, net of discount | 1,934,710 | 2,893,214 |
Total liabilities | $ 9,741,465 | $ 8,068,139 |
Commitments and contingencies (Note 7) | ||
Equity (Deficit): | ||
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2015 or December 31, 2014 | ||
Common stock, $.0001 par value; 250,000,000 shares authorized; 92,684,779 and 53,816,667 shares issued and outstanding at September 30, 2015 and December 31, 2014 | $ 9,068 | $ 5,182 |
Additional paid-in capital | 2,201,718 | 1,848,172 |
Accumulated deficit | (11,537,116) | (9,510,713) |
Total deficit | (9,326,330) | (7,657,359) |
Total liabilities and equity (deficit) | $ 415,135 | $ 410,780 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 92,685,779 | 53,816,667 |
Common stock, shares outstanding | 92,685,779 | 53,816,667 |
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Sales revenue | $ 117,002 | $ 248,549 | $ 421,636 | $ 587,920 |
Cost of goods sold | (66,767) | (135,509) | (212,759) | (313,532) |
Gross profit | 50,235 | 113,040 | 208,877 | 274,388 |
Operating expenses: | ||||
Research and development | 64,715 | 69,841 | 192,087 | 184,608 |
Sales and marketing | 28,882 | 55,521 | 98,784 | 126,667 |
General and administrative | 275,301 | 601,379 | 1,060,021 | 1,526,374 |
Total operating expenses | 368,898 | 726,741 | 1,350,892 | 1,837,649 |
Loss from operations | (318,663) | (613,701) | (1,142,015) | (1,563,261) |
Other income (expense): | ||||
Interest expense | (365,861) | (104,429) | (856,817) | (284,406) |
Other | (10,041) | 42,437 | (27,571) | 126,735 |
Other income (expense), net | (375,902) | (61,992) | (884,388) | (157,671) |
Net loss | $ (694,565) | $ (675,693) | $ (2,026,403) | $ (1,720,932) |
Net loss per common share (Note 9): Basic and diluted | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.04) |
Weighted average common shares outstanding: Basic and diluted | 89,992,553 | 51,587,729 | 64,985,322 | 38,755,604 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating Activities: | ||
Net loss | $ (2,026,403) | $ (1,720,932) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | $ 166,662 | |
Amortization of debt issuance costs | $ 60,254 | |
Amortization of debt discount | 72,310 | |
Common stock issued for services | $ 40,400 | |
Expense converted to debt | $ 284,406 | |
Changes in operating assets and liabilities (net of Share Exchange): | ||
Accounts receivable | $ 12,087 | (5,969) |
Inventory | 15,240 | (21,477) |
Prepaid expenses and other | 17,310 | 1,053 |
Accounts payable | 785,683 | 1,087,974 |
Accrued liabilities | 400,156 | (387) |
Net cash used in operating activities | $ (622,963) | (165,716) |
Investing Activities: | ||
Intangible assets | $ (25,097) | |
Property and equipment | ||
Net cash used in investing activities | $ (25,097) | |
Financing Activities: | ||
Proceeds from debt | $ 1,287,112 | $ 307,777 |
Payments of debt | $ (704,601) | |
Member activity | $ (136,534) | |
Net cash provided by financing activities | $ 582,511 | 171,243 |
Net change in cash | (40,452) | (19,570) |
Cash, beginning of period | 43,879 | 37,874 |
Cash, end of period | 3,427 | $ 18,304 |
Cash paid for: | ||
Interest | 279,060 | |
Debt converted to common stock | 95,395 | |
Accounts payable converted to debt | 653,176 | |
Accrued liabilities converted to debt | 53,053 | |
Debt issuance costs | $ 149,698 |
1. Description of Business and
1. Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
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 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 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 Companys entry into the LED lighting industry. The Companys 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 and nine months ended September 30, 2015 and as of December 31, 2014. The accompanying condensed consolidated balance sheet as of December 31, 2014, 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-K for the period ended December 31, 2014. Going Concern As shown in the accompanying financial statements, we had an equity deficit of $9,326,330 and a working capital deficit of $7,504,325 as of September 30, 2015, and have reported net losses of $2,026,403 and $1,720,932 for the nine months ended September 30, 2015 and 2014, 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. Reclassifications Certain prior year amounts have been reclassified to conform with the current year presentation. Recently Issued Accounting Pronouncements In July 2015, the FASB issued ASU No. 2015-11 (ASU 2015-11), Inventory (Topic 330): Simplifying the Measurement of Inventory. In July 2015, the FASB issued ASU No. 2015-12 (ASU 2015-12), Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the FASB Emerging Issues Task Force) Practical Expedient for the Measurement Date of an Employers Defined Benefit Obligation and Plan Assets In August 2015, the FASB issued ASU No. 2015-13 (ASU 2015-13), Derivatives and Hedging (Topic 815): Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets (a consensus of the FASB Emerging Issues Task Force) In August 2015, the FASB issued ASU No. 2015-14 (ASU 2015-14), Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers In August 2015, the FASB issued ASU No. 2015-15 (ASU 2015-15), InterestImputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit ArrangementsAmendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update) In September 2015, the FASB issued ASU No. 2015-16 (ASU 2015-16), Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments |
2. Recapitalization
2. Recapitalization | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [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 valued at $0.05 per share, the closing price of Holdings common 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, are as follows: Nine months ended September 30, 2014 Pro forma results: Total net revenues $ 587,920 Net loss (1,994,849 ) Net loss per common share: Basic and diluted $ (0.04 ) 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, 2015 | |
Receivables [Abstract] | |
3. Accounts receivable | Note 3 Accounts receivable The following is a summary of accounts receivable: September 30, 2015 December 31, 2014 Customer receivables $ 28,130 $ 41,234 Less: Allowance for uncollectible accounts (12,880 ) (13,897 ) $ 15,250 $ 27,337 |
4. Inventory
4. Inventory | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
4. Inventory | Note 4 Inventory The following is a summary of inventory: September 30, 2015 December 31, 2014 Raw materials $ 347,103 $ 420,424 Less: reserve (113,681 ) (171,762 ) $ 233,422 $ 248,662 |
5. Other assets
5. Other assets | 9 Months Ended |
Sep. 30, 2015 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
5. Other assets | Note 5 Other assets The following is a summary of other assets: September 30, 2015 December 31, 2014 Debt issuance costs $ 100,360 $ 10,916 Deposits 12,345 11,695 $ 112,705 $ 22,611 |
6. Debt
6. Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
6. Debt | Note 6 Debt Debt is comprised of the following: Description Note September 30, 2015 December 31, 2014 Line of credit A $ 47,000 $ 47,000 Note payable to distribution partner B 550,000 580,000 Investor debt C 267,787 267,787 Related party debt D 5,340,709 3,840,749 Other notes payable E 68,952 57,692 Cash draw notes F 146,432 255,793 Convertible promissory notes G 188,684 217,500 Total 6,609,564 5,266,521 Less: unamortized discount (145,415 ) Debt, net of unamortized discount 6,464,149 5,266,521 Less: current portion, net of unamortized discount (4,529,439 ) (2,373,307 ) Debt, long-term portion $ 1,934,710 $ 2,893,214 A Line of Credit B Note payable to distribution partner C Investor Debt September 30, 2015 December 31, 2014 Interest Rate $ 87,787 $ 87,787 24 % 50,000 50,000 24 % 50,000 50,000 24 % 25,000 25,000 8 % 25,000 25,000 8 % 20,000 20,000 2 % 10,000 10,000 24 % $ 267,787 $ 267,787 D Related Parties Debt September 30, 2015 December 31, 2014 Interest Rate D1 $ 3,850,465 $ 3,152,231 6 % D2 527,380 497,130 12 % D3 34,888 34,888 12 % D4 274,800 156,500 24 % D5 653,176 18 % Total $ 5,340,709 $ 3,840,749 D1 We evaluated the agreements for derivatives and determined that they do not qualify for derivative treatment for financial reporting purposes, because the agreements relate 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. D2 D3 D4 D5 E Other Notes Payable F Cash draw agreements G Convertible promissory notes Debt issuance costs of $100,360 are included in Other assets as of September 30, 2015, and are being amortized over the life of the respective notes. |
7. Contingencies
7. Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
7. Contingencies | Note 7 Contingencies Current management discovered that the Companys former management recorded various obligations to itself and to third parties for expenditures not deemed benefitting the Company or authorized by the Companys 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 parties or whether we could, in fact, be eventually responsible to pay some or all of the indicated amount. |
8. Subsequent Events
8. Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
8. Subsequent Events | Note 8 Subsequent Events On October 1, 2015, one of the convertible debt holders converted $2,771 in exchange for 1,365,014 shares of our common stock. On October 15, 2015, one of the convertible debt holders converted $7,086 in exchange for 3,054,275 shares of our common stock. On November 2, 2015, one of the convertible debt holders converted $6,097 in exchange for 3,003,605 shares of our common stock. |
9. Net Loss Per Share
9. Net Loss Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
9. Net Loss Per Share | Note 9 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, 2015. 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, 2015 2014 2015 2014 Net loss $ (694,565 ) $ (675,693 ) $ (2,026,403 ) $ (1,720,932 ) Weighted average outstanding shares of common stock 89,992,553 51,587,729 64,985,322 38,755,604 Dilutive effect of stock options and warrants Common stock and equivalents 89,992,553 51,587,729 64,985,322 38,755,604 Net loss per share Basic and diluted $ (0.01 ) $ (0.01 ) $ (0.03 ) $ (0.04 ) |
1. Description of Business an15
1. Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Formation of the Company | Formation of the Company On December 31, 2013, Energie Holdings, Inc. (we, us, our, the Company 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 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 Companys entry into the LED lighting industry. The Companys 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 and nine months ended September 30, 2015 and as of December 31, 2014. The accompanying condensed consolidated balance sheet as of December 31, 2014, 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-K for the period ended December 31, 2014. |
Going Concern | Going Concern As shown in the accompanying financial statements, we had an equity deficit of $9,326,330 and a working capital deficit of $7,504,325 as of September 30, 2015, and have reported net losses of $2,026,403 and $1,720,932 for the nine months ended September 30, 2015 and 2014, 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. |
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 July 2015, the FASB issued ASU No. 2015-11 (ASU 2015-11), Inventory (Topic 330): Simplifying the Measurement of Inventory. In July 2015, the FASB issued ASU No. 2015-12 (ASU 2015-12), Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the FASB Emerging Issues Task Force) Practical Expedient for the Measurement Date of an Employers Defined Benefit Obligation and Plan Assets In August 2015, the FASB issued ASU No. 2015-13 (ASU 2015-13), Derivatives and Hedging (Topic 815): Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets (a consensus of the FASB Emerging Issues Task Force) In August 2015, the FASB issued ASU No. 2015-14 (ASU 2015-14), Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers In August 2015, the FASB issued ASU No. 2015-15 (ASU 2015-15), InterestImputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit ArrangementsAmendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update) In September 2015, the FASB issued ASU No. 2015-16 (ASU 2015-16), Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments |
2. Recapitalization (Tables)
2. Recapitalization (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Effects of Acquisition | Nine months ended September 30, 2014 Pro forma results: Total net revenues $ 587,920 Net loss (1,994,849 ) Net loss per common share: $ (0.04 ) Basic and diluted 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 (Tables)
3. Accounts receivable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Receivables [Abstract] | |
Accounts Receivable | September 30, 2015 December 31, 2014 Customer receivables $ 28,130 $ 41,234 Less: Allowance for uncollectible accounts (12,880 ) (13,897 ) $ 15,250 $ 27,337 |
4. Inventory (Tables)
4. Inventory (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory | September 30, 2015 December 31, 2014 Raw materials $ 347,103 $ 420,424 Less: reserve (113,681 ) (171,762 ) $ 233,422 $ 248,662 |
5. Other assets (Tables)
5. Other assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | September 30, 2015 December 31, 2014 Debt issuance costs $ 100,360 $ 10,916 Deposits 12,345 11,695 $ 112,705 $ 22,611 |
6. Debt (Tables)
6. Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Description Note September 30, 2015 December 31, 2014 Line of credit A $ 47,000 $ 47,000 Note payable to distribution partner B 550,000 580,000 Investor debt C 267,787 267,787 Related party debt D 5,340,709 3,840,749 Other notes payable E 68,952 57,692 Cash draw notes F 146,432 255,793 Convertible promissory notes G 188,684 217,500 Total 6,609,564 5,266,521 Less: unamortized discount (145,415 ) Debt, net of unamortized discount 6,464,149 5,266,521 Less: current portion, net of unamortized discount (4,529,439 ) (2,373,307 ) Debt, long-term portion $ 1,934,710 $ 2,893,214 |
Investor Debt | September 30, 2015 December 31, 2014 Interest Rate $ 87,787 $ 87,787 24 % 50,000 50,000 24 % 50,000 50,000 24 % 25,000 25,000 8 % 25,000 25,000 8 % 20,000 20,000 2 % 10,000 10,000 24 % $ 267,787 $ 267,787 |
Related Parties Debt | September 30, 2015 December 31, 2014 Interest Rate D1 $ 3,850,465 $ 3,152,231 6 % D2 527,380 497,130 12 % D3 34,888 34,888 12 % D4 274,800 156,500 24 % D5 653,176 18 % Total $ 5,340,709 $ 3,840,749 |
9. Net Loss Per Share (Tables)
9. Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Net loss $ (694,565 ) $ (675,693 ) $ (2,026,403 ) $ (1,720,932 ) Weighted average outstanding shares of common stock 89,992,553 51,587,729 64,985,322 38,755,604 Dilutive effect of stock options and warrants Common stock and equivalents 89,992,553 51,587,729 64,985,322 38,755,604 Net loss per share Basic and diluted $ (0.01 ) $ (0.01 ) $ (0.03 ) $ (0.04 ) |
1. Description of Business an22
1. Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||||||
Restricted Shares Issued in Share Exchange Agreement | 33,000,000 | |||||
Ownership Represented | 65.00% | |||||
Equity Deficit | $ (9,326,330) | $ (9,326,330) | $ (7,657,359) | |||
Working Capital Deficit | (7,504,325) | (7,504,325) | ||||
Net Income Loss | $ (694,565) | $ (675,693) | $ (2,026,403) | $ (1,720,932) |
2. Recapitalization - Effects o
2. Recapitalization - Effects of Acquisition (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Net loss | $ (694,565) | $ (675,693) | $ (2,026,403) | $ (1,720,932) | |
Net loss per common share - Basic and diluted | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.04) | |
Accounts payable | $ 2,361,152 | $ 2,361,152 | $ 2,228,645 | ||
Preferred stock | |||||
Common stock | $ 9,068 | $ 9,068 | $ 5,182 | ||
Additional paid-in capital | 2,201,718 | 2,201,718 | 1,848,172 | ||
Accumulated deficit | (11,537,116) | (11,537,116) | (9,510,713) | ||
Total stockholders deficit | (9,326,330) | (9,326,330) | $ (7,657,359) | ||
Acquisition-related Costs [Member] | |||||
Total net revenues | 587,920 | ||||
Net loss | $ (1,994,849) | ||||
Net loss per common share - Basic and diluted | $ (0.04) | ||||
Accounts payable | $ 363,676 | $ 363,676 | |||
Preferred stock | |||||
Common stock | $ 194,604 | $ 194,604 | |||
Additional paid-in capital | 91,046,859 | 91,046,859 | |||
Accumulated deficit | (91,605,139) | (91,605,139) | |||
Total stockholders deficit | $ (363,676) | $ (363,676) |
2. Recapitalization (Details Na
2. Recapitalization (Details Narrative) | 12 Months Ended |
Dec. 31, 2014USD ($)$ / sharesshares | |
Accounting Policies [Abstract] | |
Stock Issued in Share Exchange, Shares | shares | 33,000,000 |
Stock Issued in Share Exchange, Price Per Share | $ / shares | $ 0.05 |
Stock Issued in Share Exchange, Consideration Received | $ 1,650,000 |
3. Accounts receivable - Accoun
3. Accounts receivable - Accounts Receivable (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Receivables [Abstract] | ||
Customer receivables | $ 28,130 | $ 41,234 |
Less: Allowance for uncollectible accounts | (12,880) | (13,897) |
Receivables, Net | $ 15,250 | $ 27,337 |
4. Inventory - Inventory (Detai
4. Inventory - Inventory (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 347,103 | $ 420,424 |
Less: Reserve | (113,681) | (171,762) |
Inventory, Net | $ 233,422 | $ 248,662 |
5. Other assets - Other Assets
5. Other assets - Other Assets (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Debt issuance costs | $ 100,360 | $ 10,916 |
Deposits | 12,345 | 11,695 |
Other Assets | $ 112,705 | $ 22,611 |
6. Debt - Debt (Details)
6. Debt - Debt (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |||
Line of credit | [1] | $ 47,000 | $ 47,000 |
Note payable to distribution partner | [2] | 550,000 | 580,000 |
Investor debt | [3] | 267,787 | 267,787 |
Related party debt | [4] | 5,340,709 | 3,840,749 |
Other notes payable | [5] | 68,952 | 57,692 |
Cash draw agreements | [6] | 146,432 | 255,793 |
Convertible promissory notes | [7] | 188,684 | 217,500 |
Total | 6,609,564 | $ 5,266,521 | |
Less: unamortized discount | (145,415) | ||
Debt, net of unamortized discount | 6,464,149 | $ 5,266,521 | |
Less: current portion | (4,529,439) | (2,373,307) | |
Debt, long-term portion | $ 1,934,710 | $ 2,893,214 | |
[1] | A - Line of Credit - We utilized this entire 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/CEO. Energie and our CEO were served with a summons and complaint, wherein the bank brought an action to collect the amount due, including interest, costs and attorney's fees. We have filed a response to the complaint and are engaged in settlement discussions with the bank. Accordingly, the amounts due are classified as current liabilities in the accompanying condensed, consolidated balance sheets. | ||
[2] | B - Note payable to distribution partner - Note payable to a significant European distribution partner, entered into in October 2014, bearing interest at 5% payable quarterly, with principal payable monthly through September 2019. The 2014 note payable aggregated the 2007 promissory note, accrued interest and accounts payable. | ||
[3] | C - Investor Debt - Notes payable to lenders having an ownership interest in Holdings at September 30, 2015 and December 31, 2014. These loans are not collateralized. The following summarizes the terms and balances of the investor debt: | ||
[4] | D - Related Parties Debt - The following summarizes notes payable to related parties: | ||
[5] | E - Other Notes Payable - Represents the outstanding principal balance on two separate notes bearing interest at approximately 12% annually. In the event we receive proceeds as the beneficiary of a life insurance policy covering our majority shareholder/CEO, repayment of principal and interest is due on these notes prior to using the proceeds for any other purpose. | ||
[6] | F - Cash draw agreements - Under these agreements, the lender advances us the principal balance and then automatically withdraws a stated amount each business day. Accordingly, there is no stated interest rate. The total remaining daily payments due under these arrangements was $194,170 as of September 30, 2015. The maturity dates of the agreements range from October 2015 to February 2016. | ||
[7] | G - Convertible promissory notes - Represents the outstanding principal balance on two separate convertible promissory notes payable to an entity with interest of 8% annually, due in August 2016. During the third quarter of 2015, the current holder of the notes purchased all of our similar outstanding convertible notes from another entity and consolidated those notes into two new notes. 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 conversion feature is minimal, so no value has been assigned to the beneficial conversion feature. During the nine months ended September 30, 2015, $95,395 of principal and $3,912 of interest was converted into 34,768,112 shares of common stock. |
6. Debt - Investor Debt (Detail
6. Debt - Investor Debt (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Investor Debt Balances | $ 6,609,564 | $ 5,266,521 |
Investor 1 | ||
Investor Debt Balances | $ 87,787 | 87,787 |
Investor Debt, Interest Rate | 24.00% | |
Investor 2 | ||
Investor Debt Balances | $ 50,000 | 50,000 |
Investor Debt, Interest Rate | 24.00% | |
Investor 3 | ||
Investor Debt Balances | $ 50,000 | 50,000 |
Investor Debt, Interest Rate | 24.00% | |
Investor 4 | ||
Investor Debt Balances | $ 25,000 | 25,000 |
Investor Debt, Interest Rate | 8.00% | |
Investor 5 | ||
Investor Debt Balances | $ 25,000 | 25,000 |
Investor Debt, Interest Rate | 8.00% | |
Investor 6 | ||
Investor Debt Balances | $ 20,000 | 20,000 |
Investor Debt, Interest Rate | 2.00% | |
Investor 7 | ||
Investor Debt Balances | $ 10,000 | 10,000 |
Investor Debt, Interest Rate | 24.00% | |
Investor Debt Total | ||
Investor Debt Balances | $ 267,787 | $ 267,787 |
6. Debt - Related Parties Debt
6. Debt - Related Parties Debt (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | ||
D1 | |||
Related Party Debt | [1] | $ 3,850,465 | $ 3,152,231 |
Related Party Debt, Interest Rate | 6.00% | ||
D2 | |||
Related Party Debt | [2] | $ 527,380 | 497,130 |
Related Party Debt, Interest Rate | 12.00% | ||
D3 | |||
Related Party Debt | [3] | $ 34,888 | 34,888 |
Related Party Debt, Interest Rate | 12.00% | ||
D4 | |||
Related Party Debt | [4] | $ 274,800 | $ 156,500 |
Related Party Debt, Interest Rate | 24.00% | ||
D5 | |||
Related Party Debt | [5] | $ 653,176 | |
Related Party Debt, Interest Rate | 18.00% | ||
Related Parties Debt Total | |||
Related Party Debt | $ 5,340,709 | $ 3,840,749 | |
[1] | D1 - Notes payable to Symbiote, Inc. ("Symbiote"), entered into from December 2014 through August 2015, with monthly principal and interest payable through November 2017. The 2014 notes aggregated previous notes payable, accrued interest and accounts payable. Neither the 2014 nor the 2015 notes are convertible. The previous note agreement gave Symbiote, at its option at any time after default, the right 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. Symbiote holds a large ownership percentage in Holdings, is the lessor of our manufacturing facility, and the provider of our payroll services. We evaluated the agreements for derivatives and determined that they do not qualify for derivative treatment for financial reporting purposes, because the agreements relate 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. | ||
[2] | D2 - Notes payable to an executive vice president, entered into from December 2014 through July 2015, with monthly principal and interest payable through November 2017. The 2014 note aggregated previous notes payable, accrued interest and accounts payable. | ||
[3] | D3 - Note payable to our Chief Executive Officer ("CEO"), entered into in December 2014, with monthly principal and interest payable through November 2015. | ||
[4] | D4 - Notes payable to the spouse of our CEO, due upon demand. | ||
[5] | D5 - Notes payable to the consulting firm that employs our Chief Financial Officer, entered into in June 2015. These notes aggregate the previous accounts payable and accrued interest due to the consulting firm. If we have not paid $300,000 by December 31, 2015, then beginning January 1, 2016, the notes are convertible into shares of our common stock at a conversion rate of 75% of the volume weighted average market price of our stock over the 20 days preceding the notification of conversion. We determined that this conversion feature does not meet the requirements to be treated as a derivative; however, we did determine it was a beneficial conversion feature. Accordingly, we recorded a debt discount of $217,725, which is being amortized through interest expense over the life of the notes. |
7. Contingencies (Details Narra
7. Contingencies (Details Narrative) | Sep. 30, 2015USD ($) |
Unauthorized Expenditures | |
Unauthorized Expenditures | $ 91,172 |
Unauthorized Management Fees | |
Unauthorized Expenditures | $ 60,000 |
8. Subsequent Events (Details N
8. Subsequent Events (Details Narrative) - USD ($) | Nov. 02, 2015 | Oct. 15, 2015 | Oct. 01, 2015 |
Subsequent Events [Abstract] | |||
Debt Converted | $ 6,097 | $ 7,086 | $ 2,771 |
Debt Converted, Shares Issued Upon Conversion | 3,003,605 | 3,054,275 | 1,365,014 |
9. Net Loss Per Share - Net Los
9. Net Loss Per Share - Net Loss Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (694,565) | $ (675,693) | $ (2,026,403) | $ (1,720,932) |
Weighted average outstanding shares of common stock | 89,992,553 | 51,587,729 | 64,985,322 | 38,755,604 |
Dilutive effect of stock options and warrants | ||||
Common stock and equivalents | $ 89,992,553 | $ 51,587,729 | $ 64,985,322 | $ 38,755,604 |
Net loss per share - Basic and diluted | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.04) |