Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Apr. 11, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Energie Holdings, Inc. | ||
Entity Central Index Key | 774,937 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 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 Public Float | $ 231,691 | ||
Entity Common Stock, Shares Outstanding | 122,189,455 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 17,987 | $ 43,879 |
Receivables, net | 8,551 | 27,337 |
Inventory, net | 190,151 | 248,662 |
Prepaid expenses and other | 52,759 | 68,291 |
Total current assets | 269,448 | 388,169 |
Noncurrent assets: | ||
Debt issuance costs and Deposits | 113,703 | 22,611 |
Total noncurrent assets | 113,703 | 22,611 |
Total assets | 383,151 | 410,780 |
Current liabilities: | ||
Accounts payable | 2,505,397 | 2,228,645 |
Accrued liabilities | 1,076,040 | 572,973 |
Debt, current portion | 5,257,663 | 2,373,307 |
Total current liabilities | 8,839,100 | 5,174,925 |
Debt, long-term portion | 1,593,003 | 2,893,214 |
Total liabilities | $ 10,432,103 | $ 8,068,139 |
Commitments and contingencies (Note 9) | ||
Equity: | ||
Common stock, $.0001 par value; 250,000,000 shares authorized; 113,914,718 and 53,816,667 shares issued and outstanding at December 31, 2015 and 2014 | $ 11,191 | $ 5,182 |
Additional paid-in capital | 2,446,196 | 1,848,172 |
Accumulated deficit | (12,506,339) | (9,510,713) |
Total deficit | (10,048,952) | (7,657,359) |
Total liabilities and equity | $ 383,151 | $ 410,780 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ .0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 113,914,718 | 53,816,667 |
Common stock, shares outstanding | 113,914,718 | 53,816,667 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Revenue | $ 543,036 | $ 756,385 |
Cost of revenue | 328,971 | 407,680 |
Gross profit | 214,065 | 348,705 |
Operating expenses: | ||
Research and development | 255,754 | 235,172 |
Sales and marketing | 109,594 | 295,643 |
General and administrative | $ 1,469,201 | 1,779,878 |
Impairment of long-lived assets | 977,400 | |
Total operating expenses | $ 1,834,549 | 3,288,093 |
Loss from operations | (1,620,484) | (2,939,388) |
Other income (expense): | ||
Interest expense | (1,273,255) | $ (760,849) |
Loss on conversion of debt | (211,304) | |
Gain on forgiveness of debt | 155,717 | |
Other | (46,300) | $ (13,055) |
Other income (expense), net | (1,375,142) | (773,904) |
Net loss | $ (2,995,626) | $ (3,713,292) |
Net loss per common share Basic and diluted | $ (0.04) | $ (0.09) |
Weighted average common shares outstanding: Basic and diluted | 74,761,927 | 42,392,913 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Additional Paid-In Capital | Retained Deficit | Members' Deficit | Total |
Beginning Balance Amount at Dec. 31, 2013 | $ (2,996,694) | $ (2,996,694) | |||
Net loss | (1,045,239) | (3,713,292) | |||
Member activity | (115,512) | (115,512) | |||
Member equity reclassified as accrued interest | (110,197) | (110,197) | |||
Member equity reclassified as debt | (366,738) | (366,738) | |||
Change in capital structure, Shares | 51,400,000 | ||||
Change in capital structure, Amount | $ 514,000 | $ 1,330,604 | $ (6,842,660) | $ 4,634,380 | (363,676) |
Change in par value, Shares | |||||
Change in par value, Amount | $ (508,860) | 508,860 | |||
Common stock issued for services, Shares | 416,667 | ||||
Common stock issued for services, Amount | $ 42 | 8,708 | 8,750 | ||
Shares reserved for issuance, Shares at Dec. 31, 2014 | 2,000,000 | ||||
Consolidated Loss | $ (2,668,053) | (2,668,053) | |||
Ending Balance, Shares at Dec. 31, 2014 | 53,816,667 | ||||
Ending Balance, Amount at Dec. 31, 2014 | $ 5,182 | 1,848,172 | $ (9,510,713) | (7,657,359) | |
Net loss | (2,995,626) | ||||
Common stock issued for services, Shares | 4,150,000 | ||||
Common stock issued for services, Amount | $ 415 | 40,435 | 40,850 | ||
Conversion of debt, Shares | 55,948,051 | ||||
Conversion of debt, Amount | $ 5,594 | 339,864 | 345,458 | ||
Debt discount | 217,725 | 217,725 | |||
Consolidated Loss | $ (2,995,626) | (2,995,626) | |||
Ending Balance, Shares at Dec. 31, 2015 | 113,914,718 | ||||
Ending Balance, Amount at Dec. 31, 2015 | $ 11,191 | $ 2,446,196 | $ (12,506,339) | $ (10,048,952) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Activities: | ||
Net loss | $ (2,995,626) | $ (3,713,292) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 198,597 | |
Impairment of long-lived assets | 977,400 | |
Amortization of debt issuance costs | $ 102,257 | 3,334 |
Amortization of debt discount | 145,415 | |
Common stock issued for services | $ 40,850 | 8,750 |
Expense converted to debt | $ 774,167 | |
Loss on conversion of debt | $ 211,304 | |
Changes in operating assets and liabilities (net of Share Exchange): | ||
Accounts receivable | 18,786 | $ 10,688 |
Inventory | 58,511 | 165,646 |
Prepaid expenses | 14,882 | (66,619) |
Accounts payable | 929,928 | 840,788 |
Accrued liabilities | 560,632 | 313,214 |
Net cash used in operating activities | $ (913,061) | (487,327) |
Investing Activities: | ||
Intangible assets | (32,776) | |
Property and equipment | (250) | |
Net cash used in investing activities | (33,026) | |
Financing Activities: | ||
Proceeds from debt | $ 1,421,326 | 758,719 |
Payments of debt | (534,157) | (232,361) |
Net cash provided by financing activities | 887,169 | 526,358 |
Net change in cash | (25,892) | 6,005 |
Cash, beginning of period | 43,879 | 37,874 |
Cash, end of period | 17,987 | 43,879 |
Cash paid for: | ||
Interest | $ 414,743 | $ 103,712 |
Income taxes | ||
Non-cash transactions: | ||
Debt converted to common stock | $ 134,154 | |
Accounts payable converted to debt | 653,176 | |
Accrued liabilities converted to debt | 53,053 | |
Debt issuance costs | $ 192,699 |
1. Description of Business and
1. Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 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 ExeLED Holdings, Inc. was incorporated in the State of Delaware on October 20, 1986 under the name Verilink Corporation. We have also been known as Energie Holdings, Inc. and Alas Aviation Corp. On December 31, 2013, we 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 are described below. Upon effectiveness, we issued 33,000,000 restricted shares of our common stock, representing approximately 65% of our then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Energie. 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, we entered into an Agreement and Plan of Merger (the Merger Agreement) with two of our then wholly owned subsidiaries, Energie Holdings, Inc. and Alas Acquisition Company. 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 our entry into the LED lighting industry. Our management also changed. All references herein to us, we, our, Holdings, or the Company refer to ExeLED Holdings, Inc. and its subsidiaries, and their respective business following the consummation of the Merger and Share Exchange Agreements, unless the context otherwise requires. 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. Energie 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 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 year ended December 31, 2015 and for the six months ended December 31, 2014. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result. Going Concern As shown in the accompanying financial statements, we had an equity deficit of $10,048,952 and a working capital deficit of $8,569,652 as of December 31, 2015, and have reported net losses of $2,995,626 and $3,713,292, respectively, for the years ended December 31, 2015 and 2014. 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 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. Some of our debt agreements are due on demand. 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. While we have entered into extensions with several of our lenders, 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. Summary of Significant Accounting Policies Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits with banks, and investments that are highly liquid and have maturities of three months or less at the date of purchase. Accounts receivable We record accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and is charged to Other income (expense) in the consolidated statements of operations. We calculate this allowance based on our history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and our relationships with, and the economic status of, our customers. At our discretion, we may sell our accounts receivable with recourse in order to accelerate the receipt of cash. Upon the sale of selected accounts receivable, title transfers to the counterparty to the factoring agreement, we receive 85% of the face amount sold, and we remove the account receivable from our balance. We pay a commission and, if the balance is not collected by the counterparty within 30 days, a factoring fee. We are responsible for repaying the factoring counterparty for any amounts they are unable to collect. The factoring counterparty retains a reserve in the event the amount they ultimately collect is less than the amount paid to us. Depending on the volume of activity and uncollected accounts, therefore, we may have a receivable from or a liability to the factoring counterparty. Inventory Inventory is stated at the lower of cost or market, using the first-in, first-out method (FIFO) to determine cost. We monitor inventory cost compared to selling price in order to determine if a lower of cost or market reserve is necessary. We also estimate and maintain an inventory reserve, as needed, for such matters as obsolete inventory, shrink and scrap. Intangible assets Our intangible assets consist of the following: UL Listings TM Trademarks Marketing and design Intangible assets are recorded at the cost to acquire the intangible, net of amortization over their estimated useful lives on a straight-line basis. We determine the useful lives of our intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, our long-term strategy for using the asset, any laws or other local regulations that could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Property and equipment Property and equipment are stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of our assets, which are reviewed periodically. Impairment of long-lived assets When facts and circumstances indicate that the carrying value of long-lived assets may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of revenues and the resulting gross profit and cash flows. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized, if any, is the amount by which the carrying amount of the asset (or asset group) exceeds the fair value. We may use a variety of methods to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions we believe hypothetical marketplace participants would use. We have the option to perform a qualitative assessment of long-lived assets prior to completing the impairment test described above. We must assess whether it is more likely than not that the fair value of the long-lived assets is less than their carrying amount. If we conclude that this is the case, we must perform the test described above. Otherwise, we do not need to perform any further assessment. As a result of applying the above procedures, we fully impaired our long-lived assets during the year ended December 31, 2014. Warranty reserve We provide limited product warranty for one year on our products and, accordingly, accrue an estimate of the related warranty expense at the time of sale, included in Accrued liabilities on the consolidated balance sheets. Convertible debt We first evaluate our convertible debt to determine whether the conversion feature is an embedded derivative that requires bifurcation and derivative treatment. Based on our analysis, we determined derivative treatment was not required. We then evaluate whether the conversion feature is a beneficial conversion feature. Our convertible debt is treated as a liability and permits settlement in cash. Accordingly, in order to determine the value of the conversion feature, we compared the estimated fair value of the convertible debt to the fair value of debt that did not have the conversion feature. Based on this analysis, we concluded that the value of the conversion feature was immaterial. Equity As a result of the Share Exchange, Energie is considered to be the accounting acquirer and, accordingly, is treated as the predecessor company. Accordingly, the equity presented prior to the effective date of the Share Exchange is that of Energie, LLC. Subsequent to the effective date of the Share Exchange, July 2, 2014, the equity presented represents the equity of Holdings. Revenue recognition We recognize revenue when the four revenue recognition criteria are met, as follows: Persuasive evidence of an arrangement exists Delivery The price is fixed or determinable Collectability is reasonably assured Refunds and returns, which are minimal, are recorded as a reduction of revenue. Payments received by customers prior to our satisfying the above criteria are recorded as unearned income in the consolidated balance sheets. Shipping and handling Payments by customers to us for shipping and handling costs are included in revenue on the consolidated statements of operations, while our expense is included in cost of revenues. Shipping and handling for inventory and materials purchased by us is included as a component of inventory on the consolidated balance sheets, and in cost of revenues in the consolidated statements of operations when the product is sold. Research and development costs Internal costs related to research and development efforts on existing or potential products are expensed as incurred. External costs incurred for intangible assets, such as UL listing costs and attorney fees for patents, are capitalized. Income taxes We recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the income tax and financial reporting carrying amount of our assets and liabilities. We monitor our deferred tax assets and evaluate the need for a valuation allowance based on the estimate of the amount of such deferred tax assets that we believe do not meet the more-likely-than-not recognition criteria. We also evaluate whether we have any uncertain tax positions and would record a reserve if we believe it is more-likely-than-not our position would not prevail with the applicable tax authorities. Our assessment of tax positions as of December 31, 2015 and 2014, determined that there were no material uncertain tax positions. Prior to the Share Exchange, we were a limited liability company (LLC), which is treated as a partnership for income tax purposes, where all tax obligations flow through to the owners of the LLC during the period in which income taxes were incurred. Concentration of credit risk Financial instruments that potentially subject us to concentrations of credit risk consist of accounts receivable and the amount due, if any, from our factoring counterparty. For the year ended December 31, 2015 two customers represented more than 36% of our total revenues, and as of December 31, 2015, one customer represented more than 51% of our gross accounts receivable balance. Fair value of financial instruments Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and long-term debt. The carrying value of these financial instruments is considered to be representative of their fair value due to the short maturity of these instruments. The carrying amount of our long-term debt approximates fair value, because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. Fair value is defined 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Reportable segments We have identified our operating segments, our chief operating decision maker (CODM), and the discrete financial information reviewed by the CODM. After evaluating this information, we have determined that we have one reportable segment. Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date In February 2015, the FASB issued ASU No. 2015-02 (ASU 2015-02), Consolidation (Topic 810) Amendments to the Consolidation Analysis In April 2015, the FASB issued ASU No. 2015-03 (ASU 2015-03), Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs 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 July 2015, the FASB issued ASU No. 2015-11 (ASU 2015-11), Inventory (Topic 330): Simplifying the Measurement of Inventory. In September 2015, the FASB issued ASU No. 2015-16 (ASU 2015-16), Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740) Other recent accounting pronouncements issued by the FASB and the SEC did not, or management believes will not, have a material impact on our present or future consolidated financial statements. |
2. Recapitalization
2. Recapitalization | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [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 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, 2013, are as follows: Year ended December 31, 2014 Pro forma results: Total net revenues $ 756,385 Net loss (3,987,209 ) Net loss per common share: Basic and diluted $ (0.08 ) 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. Receivables
3. Receivables | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
3. Receivables | Note 3 Receivables Receivables consist of the following: December 31, 2015 2014 Customer receivables $ 21,431 $ 41,234 Less: Allowance for uncollectible accounts (12,880 ) (13,897 ) $ 8,551 $ 27,337 |
4. Inventory
4. Inventory | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
4. Inventory | Note 4 Inventory Inventory consists of the following: December 31, 2015 2014 Raw materials $ 348,342 $ 420,424 Less: Reserve (158,191 ) (171,762 ) $ 190,151 $ 248,662 |
5. Intangible Assets
5. Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
5. Intangible Assets | Note 5 Intangible Assets Amortization expense for the years ended December 31, 2015 and 2014 was $0 and $179,431, respectively. We recorded impairment expense of $972,895 during the year ended December 31, 2014. For the year ended December 31, 2014, we determined that the carrying value of our intangible assets was greater than their estimated fair value and recorded an impairment loss of $972,895. Fair value was estimated using discounted, estimated future cash flows, which were projected based on recent, actual results. The estimated future cash flows did not include the benefit of additional capital or acquisitions, as there can be no assurance that they will occur. |
6. Property and Equipment
6. Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
6. Property and Equipment | Note 6 Property and Equipment Depreciation expense for the years ended December 31, 2015 and 2014 was $0 and $19,166, respectively. We recorded impairment expense of $4,505 during the year ended December 31, 2014. For the year ended December 31, 2014, we determined the carrying value of our property and equipment was greater than their estimated fair value and recorded an impairment loss of $4,505. Fair value was estimated using discounted, estimated future cash flows, which were projected based on recent, actual results. The estimated future cash flows did not include the benefit of additional capital or acquisitions, as there can be no assurance that they will occur. |
7. Debt
7. Debt | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
7. Debt | Note 7 Debt Debt consists of the following: December 31, Description Note 2015 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 5,632,543 3,840,749 Other notes payable E 66,786 57,692 Cash draw agreements F 204,423 255,793 Convertible promissory notes G 154,437 217,500 Total 6,922,976 5,266,521 Less: unamortized discount (72,310 ) Debt, net of unamortized discount 6,850,666 5,266,521 Less: current portion, net of unamortized discount (5,257,663 ) (2,373,307 ) Debt, long-term portion $ 1,593,003 $ 2,893,214 A Line of Credit B Note Payable to Distribution Partner C Investor Debt December 31, 2015 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 Party Debt December 31, 2015 2014 Interest Rate D1 $ 4,120,465 $ 3,152,231 6 % D2 528,214 497,130 12 % D3 34,888 34,888 12 % D4 280,800 156,500 24 % D5 668,176 18 % Total $ 5,632,543 $ 3,840,749 D1 Notes payable to Symbiote, Inc. (Symbiote), entered into from December 2014 to December 2015, with monthly principal and interest payable through November 2017. The 2014 notes aggregated the 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. D2 D3 D4 D5 E Other Notes Payable F Cash draw agreements G Convertible promissory notes Debt issuance costs of $101,358 are being amortized over the life of the respective notes. The future maturities of debt are as follows: Year ending December 31, 2016 $ 5,329,973 2017 1,373,003 2018 120,000 2019 100,000 $ 6,922,976 |
8. Equity
8. Equity | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
8. Equity | Note 8 Equity We have authorized 5,000,000 shares of preferred stock at $0.0001 par value, with no shares issued and outstanding as of December 31, 2015. Upon issuing preferred stock, if any, the terms of each tranche of issuance may be determined by our board of directors, including dividends and voting rights. In July 2014, we entered into an agreement with Dutchess Opportunity Fund, II, LP (Dutchess), under which Dutchess has agreed to purchase from us 5,000,000 shares of our common stock, up to $5 million, during a 36 month period commencing on the date a Registration Statement on Form S-1 was declared effective, October 29, 2014. We will sell these shares to Dutchess at a price equal to 94% of the lowest daily volume weighted-average price of our common stock during the five consecutive trading days beginning on the day we make notice to Dutchess and ending on and including the date that is four trading days after such notice. We have the right to withdraw all or any portion of any put before the closing, subject to certain limitations. As part of the agreement with Dutchess, we transferred 2,000,000 shares of our common stock for no proceeds. We will receive proceeds when we make notice to Dutchess to sell these shares. The market price of the 2,000,000 shares was $40,000, based on the trading price on the date of transfer. If we do not make notice to Dutchess, these shares will be returned to us at the end of the 36 month contractual period. As of December 31, 2015, we had not made notice to Dutchess to sell any of these shares. Accordingly, the net impact to our stockholders equity is zero. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
9. Commitments and Contingencies | Note 9 Commitments and 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 vendors or whether we could, in fact, be eventually responsible to pay some or all of the indicated amount. Future minimum rental payments required under all leases that have remaining non-cancelable lease terms in excess of one year as of December 31, 2015, are as follows: 2016 $ 168,811 2017 142,752 2018 28,890 $ 340,453 |
10. Income Taxes
10. Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
10. Income Taxes | Note 10 Income Taxes The components of the provision for income taxes are as follows: Year ended December 31, 2015 2014 Current tax provision Federal $ (941,497 ) $ (775,545 ) State (122,690 ) (100,938 ) (1,064,187 ) (876,483 ) Deferred tax provision Federal 941,497 775,545 State 122,690 100,938 1,064,187 876,483 $ $ The components of net deferred tax assets and liabilities are as follows: Year ended December 31, 2015 2014 Current deferred tax asset (liability): Inventory reserve $ 60,794 $ 66,000 Warranty reserve 7,148 7,109 Net operating loss carryforward 1,940,670 876,483 Valuation allowance (2,008,612 ) (949,592 ) Long-term deferred tax asset (liability) Long-lived assets 124,515 136,132 Valuation allowance (124,515 ) (136,132 ) Net deferred tax asset (liability) $ $ A reconciliation of our income tax provision and the amounts computed by applying statutory rates to income before income taxes is as follows: Year ended December 31, 2015 2014 Income tax benefit at statutory rate $ (1,018,511 ) $ (1,262,519 ) State income tax, net of Federal benefit (91,540 ) (113,471 ) Change from LLC to C Corp 284,869 Amortization of debt discount 55,884 Other 6,765 5,477 Valuation allowance 1,047,402 1,085,644 $ $ |
11. Net Loss Per Share
11. Net Loss Per Share | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
11. Net Loss Per Share | Note 11 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. In a net loss position, however, potential securities are excluded, because they are considered anti-dilutive. 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 years ended December 31, 2015 and 2014. The following table presents a reconciliation of the denominators used in the computation of net loss per share basic and diluted: Year ended December 31, 2015 2014 Net loss available for stockholders $ (2,995,626 ) $ (3,713,292 ) Weighted average outstanding shares of common stock 74,761,927 42,392,913 Dilutive effect of securities Common stock and equivalents 74,761,927 42,392,913 Net loss per share Basic and diluted $ (0.04 ) $ (0.09 ) There are no dilutive instruments outstanding during the years ended December 31, 2015 and 2014. |
1. Description of Business an18
1. Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Formation of the Company | Formation of the Company ExeLED Holdings, Inc. was incorporated in the State of Delaware on October 20, 1986 under the name Verilink Corporation. We have also been known as Energie Holdings, Inc. and Alas Aviation Corp. On December 31, 2013, we 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 are described below. Upon effectiveness, we issued 33,000,000 restricted shares of our common stock, representing approximately 65% of our then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Energie. 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, we entered into an Agreement and Plan of Merger (the Merger Agreement) with two of our then wholly owned subsidiaries, Energie Holdings, Inc. and Alas Acquisition Company. 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 our entry into the LED lighting industry. Our management also changed. All references herein to us, we, our, Holdings, or the Company refer to ExeLED Holdings, Inc. and its subsidiaries, and their respective business following the consummation of the Merger and Share Exchange Agreements, unless the context otherwise requires. |
Descripton 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. Energie 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 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 year ended December 31, 2015 and for the six months ended December 31, 2014. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result. |
Going Concern | Going Concern As shown in the accompanying financial statements, we had an equity deficit of $10,048,952 and a working capital deficit of $8,569,652 as of December 31, 2015, and have reported net losses of $2,995,626 and $3,713,292, respectively, for the years ended December 31, 2015 and 2014. 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 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. Some of our debt agreements are due on demand. 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. While we have entered into extensions with several of our lenders, 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. |
Cash and Cash Equivalents | Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits with banks, and investments that are highly liquid and have maturities of three months or less at the date of purchase. |
Accounts receivable | Accounts receivable We record accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and is charged to Other income (expense) in the consolidated statements of operations. We calculate this allowance based on our history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and our relationships with, and the economic status of, our customers. At our discretion, we may sell our accounts receivable with recourse in order to accelerate the receipt of cash. Upon the sale of selected accounts receivable, title transfers to the counterparty to the factoring agreement, we receive 85% of the face amount sold, and we remove the account receivable from our balance. We pay a commission and, if the balance is not collected by the counterparty within 30 days, a factoring fee. We are responsible for repaying the factoring counterparty for any amounts they are unable to collect. The factoring counterparty retains a reserve in the event the amount they ultimately collect is less than the amount paid to us. Depending on the volume of activity and uncollected accounts, therefore, we may have a receivable from or a liability to the factoring counterparty. |
Inventory | Inventory Inventory is stated at the lower of cost or market, using the first-in, first-out method (FIFO) to determine cost. We monitor inventory cost compared to selling price in order to determine if a lower of cost or market reserve is necessary. We also estimate and maintain an inventory reserve, as needed, for such matters as obsolete inventory, shrink and scrap. |
Intangible assets | Intangible assets Our intangible assets consist of the following: UL Listings TM Trademarks Marketing and design Intangible assets are recorded at the cost to acquire the intangible, net of amortization over their estimated useful lives on a straight-line basis. We determine the useful lives of our intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, our long-term strategy for using the asset, any laws or other local regulations that could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. |
Property and equipment | Property and equipment Property and equipment are stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of our assets, which are reviewed periodically. |
Impairment of long-lived assets | Impairment of long-lived assets When facts and circumstances indicate that the carrying value of long-lived assets may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of revenues and the resulting gross profit and cash flows. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized, if any, is the amount by which the carrying amount of the asset (or asset group) exceeds the fair value. We may use a variety of methods to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions we believe hypothetical marketplace participants would use. We have the option to perform a qualitative assessment of long-lived assets prior to completing the impairment test described above. We must assess whether it is more likely than not that the fair value of the long-lived assets is less than their carrying amount. If we conclude that this is the case, we must perform the test described above. Otherwise, we do not need to perform any further assessment. As a result of applying the above procedures, we fully impaired our long-lived assets during the year ended December 31, 2014. |
Warranty reserve | Warranty reserve We provide limited product warranty for one year on our products and, accordingly, accrue an estimate of the related warranty expense at the time of sale, included in Accrued liabilities on the consolidated balance sheets. |
Convertible debt | Convertible debt We first evaluate our convertible debt to determine whether the conversion feature is an embedded derivative that requires bifurcation and derivative treatment. Based on our analysis, we determined derivative treatment was not required. We then evaluate whether the conversion feature is a beneficial conversion feature. Our convertible debt is treated as a liability and permits settlement in cash. Accordingly, in order to determine the value of the conversion feature, we compared the estimated fair value of the convertible debt to the fair value of debt that did not have the conversion feature. Based on this analysis, we concluded that the value of the conversion feature was immaterial. |
Equity | Equity As a result of the Share Exchange, Energie is considered to be the accounting acquirer and, accordingly, is treated as the predecessor company. Accordingly, the equity presented prior to the effective date of the Share Exchange is that of Energie, LLC. Subsequent to the effective date of the Share Exchange, July 2, 2014, the equity presented represents the equity of Holdings. |
Revenue recognition | Revenue recognition We recognize revenue when the four revenue recognition criteria are met, as follows: Persuasive evidence of an arrangement exists Delivery The price is fixed or determinable Collectability is reasonably assured Refunds and returns, which are minimal, are recorded as a reduction of revenue. Payments received by customers prior to our satisfying the above criteria are recorded as unearned income in the consolidated balance sheets. |
Shipping and handling | Shipping and handling Payments by customers to us for shipping and handling costs are included in revenue on the consolidated statements of operations, while our expense is included in cost of revenues. Shipping and handling for inventory and materials purchased by us is included as a component of inventory on the consolidated balance sheets, and in cost of revenues in the consolidated statements of operations when the product is sold. |
Research and development costs | Research and development costs Internal costs related to research and development efforts on existing or potential products are expensed as incurred. External costs incurred for intangible assets, such as UL listing costs and attorney fees for patents, are capitalized. |
Income taxes | Income taxes We recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the income tax and financial reporting carrying amount of our assets and liabilities. We monitor our deferred tax assets and evaluate the need for a valuation allowance based on the estimate of the amount of such deferred tax assets that we believe do not meet the more-likely-than-not recognition criteria. We also evaluate whether we have any uncertain tax positions and would record a reserve if we believe it is more-likely-than-not our position would not prevail with the applicable tax authorities. Our assessment of tax positions as of December 31, 2015 and 2014, determined that there were no material uncertain tax positions. Prior to the Share Exchange, we were a limited liability company (LLC), which is treated as a partnership for income tax purposes, where all tax obligations flow through to the owners of the LLC during the period in which income taxes were incurred. |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially subject us to concentrations of credit risk consist of accounts receivable and the amount due, if any, from our factoring counterparty. For the year ended December 31, 2015 two customers represented more than 36% of our total revenues, and as of December 31, 2015, one customer represented more than 51% of our gross accounts receivable balance. |
Fair value of financial instruments | Fair value of financial instruments Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and long-term debt. The carrying value of these financial instruments is considered to be representative of their fair value due to the short maturity of these instruments. The carrying amount of our long-term debt approximates fair value, because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. Fair value is defined 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. |
Reportable segments | Reportable segments We have identified our operating segments, our chief operating decision maker (CODM), and the discrete financial information reviewed by the CODM. After evaluating this information, we have determined that we have one reportable segment. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date In February 2015, the FASB issued ASU No. 2015-02 (ASU 2015-02), Consolidation (Topic 810) Amendments to the Consolidation Analysis In April 2015, the FASB issued ASU No. 2015-03 (ASU 2015-03), Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs 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 July 2015, the FASB issued ASU No. 2015-11 (ASU 2015-11), Inventory (Topic 330): Simplifying the Measurement of Inventory. In September 2015, the FASB issued ASU No. 2015-16 (ASU 2015-16), Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740) Other recent accounting pronouncements issued by the FASB and the SEC did not, or management believes will not, have a material impact on our present or future consolidated financial statements. |
2. Recapitalization (Tables)
2. Recapitalization (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Recapitalization | Year ended December 31, 2014 Pro forma results: Total net revenues $ 756,385 Net loss (3,987,209 ) Net loss per common share: Basic and diluted $ (0.08 ) 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. Receivables (Tables)
3. Receivables (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Receivables | December 31, 2015 2014 Customer receivables $ 21,431 $ 41,234 Less: Allowance for uncollectible accounts (12,880 ) (13,897 ) $ 8,551 $ 27,337 |
4. Inventory (Tables)
4. Inventory (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory | December 31, 2015 2014 Raw materials $ 348,342 $ 420,424 Less: Reserve (158,191 ) (171,762 ) $ 190,151 $ 248,662 |
7. Debt (Tables)
7. Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Debt | December 31, Description Note 2015 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 5,632,543 3,840,749 Other notes payable E 66,786 57,692 Cash draw agreements F 204,423 255,793 Convertible promissory notes G 154,437 217,500 Total 6,922,976 5,266,521 Less: unamortized discount (72,310 ) Debt, net of unamortized discount 6,850,666 5,266,521 Less: current portion, net of unamortized discount (5,257,663 ) (2,373,307 ) Debt, long-term portion $ 1,593,003 $ 2,893,214 |
Investor Debt | December 31, 2015 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 Party Debt | December 31, 2015 2014 Interest Rate D1 $ 4,120,465 $ 3,152,231 6 % D2 528,214 497,130 12 % D3 34,888 34,888 12 % D4 280,800 156,500 24 % D5 668,176 18 % Total $ 5,632,543 $ 3,840,749 |
Future Maturities of Debt | Year ending December 31, 2016 $ 5,329,973 2017 1,373,003 2018 120,000 2019 100,000 $ 6,922,976 |
9. Commitments and Contingenc23
9. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 2016 $ 168,811 2017 142,752 2018 28,890 $ 340,453 |
10. Income Taxes (Tables)
10. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Components of the Provision for Income Taxes | Year ended December 31, 2015 2014 Current tax provision Federal $ (941,497 ) $ (775,545 ) State (122,690 ) (100,938 ) (1,064,187 ) (876,483 ) Deferred tax provision Federal 941,497 775,545 State 122,690 100,938 1,064,187 876,483 $ $ |
Components of Net Deferred Tax Assets and Liabilities | Year ended December 31, 2015 2014 Current deferred tax asset (liability): Inventory reserve $ 60,794 $ 66,000 Warranty reserve 7,148 7,109 Net operating loss carryforward 1,940,670 876,483 Valuation allowance (2,008,612 ) (949,592 ) Long-term deferred tax asset (liability) Long-lived assets 124,515 136,132 Valuation allowance (124,515 ) (136,132 ) Net deferred tax asset (liability) $ $ |
Reconciliation of Income Tax Provision | Year ended December 31, 2015 2014 Income tax benefit at statutory rate $ (1,018,511 ) $ (1,262,519 ) State income tax, net of Federal benefit (91,540 ) (113,471 ) Change from LLC to C Corp 284,869 Amortization of debt discount 55,884 Other 6,765 5,477 Valuation allowance 1,047,402 1,085,644 $ $ |
11. Net Loss Per Share (Tables)
11. Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Year ended December 31, 2015 2014 Net loss available for stockholders $ (2,995,626 ) $ (3,713,292 ) Weighted average outstanding shares of common stock 74,761,927 42,392,913 Dilutive effect of securities Common stock and equivalents 74,761,927 42,392,913 Net loss per share Basic and diluted $ (0.04 ) $ (0.09 ) |
1. Description of Business an26
1. Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||
Working Capital Deficit | $ 8,569,652 | |
Net Income Loss | $ (2,995,626) | $ (3,713,292) |
2. Recapitalization - Recapital
2. Recapitalization - Recapitalization (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net loss | $ (2,995,626) | $ (3,713,292) | |
Net loss per common share - Basic and diluted | $ (0.04) | $ (0.09) | |
Accounts payable | $ 2,505,397 | $ 2,228,645 | |
Common stock | 11,191 | 5,182 | |
Additional paid-in capital | 2,446,196 | 1,848,172 | |
Accumulated deficit | (12,506,339) | (9,510,713) | |
Total stockholders deficit | $ (10,048,952) | (7,657,359) | $ (2,996,694) |
Pro Forma [Member] | |||
Total net revenues | 756,385 | ||
Net loss | $ (3,987,209) | ||
Net loss per common share - Basic and diluted | $ (0.08) | ||
Accounts payable | $ 363,676 | ||
Common stock | 194,604 | ||
Additional paid-in capital | 91,046,859 | ||
Accumulated deficit | (91,605,139) | ||
Total stockholders deficit | $ (363,676) |
3. Receivables - Receivables (D
3. Receivables - Receivables (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Receivables [Abstract] | ||
Customer receivables | $ 21,431 | $ 41,234 |
Less: Allowance for uncollectible accounts | (12,880) | (13,897) |
Receivables, Net | $ 8,551 | $ 27,337 |
4. Inventory - Inventory (Detai
4. Inventory - Inventory (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 348,342 | $ 420,424 |
Less: Reserve | (158,191) | (171,762) |
Inventory, Net | $ 190,151 | $ 248,662 |
5. Intangible Assets (Details N
5. Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization Expense | $ 0 | $ 179,431 |
Impairment Loss | $ 972,895 |
6. Property and Equipment (Deta
6. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation Expense | $ 0 | $ 19,166 |
Impairment Expense | $ 4,505 |
7. Debt - Debt (Details)
7. Debt - Debt (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
Line of credit | $ 47,000 | $ 47,000 |
Note payable to distribution partner | 550,000 | 580,000 |
Investor debt | 267,787 | 267,787 |
Related party debt | 5,632,543 | 3,840,749 |
Other notes payable | 66,786 | 57,692 |
Cash draw agreements | 204,423 | 255,793 |
Convertible promissory notes | 154,437 | 217,500 |
Total | 6,922,976 | $ 5,266,521 |
Less: unamortized discount | (72,310) | |
Debt, net of unamortized discount | 6,850,666 | $ 5,266,521 |
Less: current portion, net of unamortized discount | 5,257,663 | 2,373,307 |
Debt, long-term portion | $ 1,593,003 | $ 2,893,214 |
7. Debt - Investor Debt (Detail
7. Debt - Investor Debt (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Investor Debt Balances | $ 6,922,976 | $ 5,266,521 |
Investor Debt 1 | ||
Investor Debt Balances | $ 87,787 | $ 87,787 |
Investor Debt, Interest Rate | 24.00% | 24.00% |
Investor Debt 2 | ||
Investor Debt Balances | $ 50,000 | $ 50,000 |
Investor Debt, Interest Rate | 24.00% | 24.00% |
Investor Debt 3 | ||
Investor Debt Balances | $ 50,000 | $ 50,000 |
Investor Debt, Interest Rate | 24.00% | 24.00% |
Investor Debt 4 | ||
Investor Debt Balances | $ 25,000 | $ 25,000 |
Investor Debt, Interest Rate | 8.00% | 8.00% |
Investor Debt 5 | ||
Investor Debt Balances | $ 25,000 | $ 25,000 |
Investor Debt, Interest Rate | 8.00% | 8.00% |
Investor Debt 7 | ||
Investor Debt Balances | $ 20,000 | $ 10,000 |
Investor Debt, Interest Rate | 2.00% | 24.00% |
Investor Debt 6 | ||
Investor Debt Balances | $ 10,000 | $ 20,000 |
Investor Debt, Interest Rate | 24.00% | 2.00% |
Investor Debt Total | ||
Investor Debt Balances | $ 267,787 | $ 267,787 |
7. Debt - Related Party Debt (D
7. Debt - Related Party Debt (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
D1 | ||
Related Party Debt | $ 4,120,465 | $ 3,152,231 |
Related Party Debt, Interest Rate | 6.00% | 6.00% |
D2 | ||
Related Party Debt | $ 528,214 | $ 497,130 |
Related Party Debt, Interest Rate | 12.00% | 12.00% |
D3 | ||
Related Party Debt | $ 34,888 | $ 34,888 |
Related Party Debt, Interest Rate | 12.00% | 12.00% |
D4 | ||
Related Party Debt | $ 280,800 | $ 156,500 |
Related Party Debt, Interest Rate | 24.00% | 24.00% |
D5 | ||
Related Party Debt | $ 668,176 | |
Related Party Debt, Interest Rate | 18.00% | 18.00% |
Related Party Total | ||
Related Party Debt | $ 5,632,543 | $ 3,840,749 |
7. Debt - Future Maturities of
7. Debt - Future Maturities of Debt (Details) | Dec. 31, 2015USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 5,329,973 |
2,017 | 1,373,003 |
2,018 | 120,000 |
2,019 | 100,000 |
Total | $ 6,922,976 |
9. Commitments and Contingenc36
9. Commitments and Contingencies - Commitments and Contingencies (Details) | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,016 | $ 168,811 |
2,017 | 142,752 |
2,018 | 28,890 |
Total | $ 340,453 |
9. Commitments and Contingenc37
9. Commitments and Contingencies (Details Narrative) | Dec. 31, 2015USD ($) |
Unauthorized Expenditures | |
Unauthorized Expenditures | $ 91,172 |
Unauthorized Management Fees | |
Unauthorized Expenditures | $ 60,000 |
10. Income Taxes - Components o
10. Income Taxes - Components of the Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current tax provision | ||
Federal | $ (941,497) | $ (775,545) |
State | (122,690) | (100,938) |
Total Current | (1,064,187) | (876,483) |
Deferred tax provision | ||
Federal | 941,497 | 775,545 |
State | 122,690 | 100,938 |
Total Deferred | 1,064,187 | 876,483 |
Total | $ 0 | $ 0 |
10. Income Taxes - Components39
10. Income Taxes - Components of Net Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current deferred tax asset (liability): | ||
Inventory reserve | $ 60,794 | $ 66,000 |
Warranty reserve | 7,148 | 7,109 |
Net operating loss carryforward | 1,940,670 | 876,483 |
Valuation allowance | (2,008,612) | (949,592) |
Total current | 0 | 0 |
Long-term deferred tax asset (liability) | ||
Long-lived assets | 124,515 | 136,132 |
Valuation allowance | (124,515) | (136,132) |
Total long-term | 0 | 0 |
Net deferred tax asset (liability) | $ 0 | $ 0 |
10. Income Taxes - Reconciliati
10. Income Taxes - Reconciliation of Income Tax Provision (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at statutory rate | $ (1,018,511) | $ (1,262,519) |
State income tax, net of Federal benefit | $ (91,540) | (113,471) |
Change from LLC to C Corp | $ 284,869 | |
Amortization of debt discoiunt | $ 55,884 | |
Other | 6,765 | $ 5,477 |
Valuation allowance | $ 1,047,402 | $ 1,085,644 |
Income Tax Reconciliation | 0.00% | 0.00% |
11. Net Loss Per Share - Net Lo
11. Net Loss Per Share - Net Loss Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | ||
Net loss available for stockholders | $ (2,995,626) | $ (3,713,292) |
Weighted average outstanding shares of common stock | 74,761,927 | 42,392,913 |
Dilutive effect of securities | ||
Common stock and equivalents | $ 74,761,927 | $ 42,392,913 |
Net loss per share - Basic and diluted | $ (0.04) | $ (0.09) |