ExeLED (ELED) 10-Q 21 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 17, 2017
Document And Entity Information
Entity Registrant Name	ExeLED Holdings Inc.
Entity Central Index Key	774,937
Document Type	10-Q
Trading Symbol	ELED
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		249,447,433
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 7,490	$ 5,454
Accounts receivable, net	20,939	31
Inventory	153,915	157,178
Prepaid expenses and other	49,006	48,307
Total current assets	231,350	210,970
Noncurrent assets:
Deposits	6,200	6,450
Total assets	237,550	217,420
Current liabilities:
Accounts payable	3,098,169	2,988,439
Accrued liabilities	2,281,205	1,858,127
Debt, current portion, net of discount and debt issuance costs	9,684,003	8,451,781
Total current liabilities	15,063,377	13,298,347
Debt, long-term portion	160,000	220,000
Total liabilities	15,223,377	13,518,347
Commitments and contingencies (Note 5)
Equity:
Common stock, $.0001 par value; 250,000,000 shares authorized; 249,447,433 shares issued and outstanding at June 30, 2017 and December 31, 2016	24,743	24,743
Additional paid-in capital	2,635,896	2,635,896
Accumulated deficit	(17,646,466)	(15,961,566)
Total deficit	(14,985,827)	(13,300,927)
Total liabilities and equity	$ 237,550	$ 217,420

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollar per share)	$ .0001	$ 0.0001
Preferred stock, authorized	5,000,000	5,000,000
Common stock, par value (in dollar per share)	$ 0.0001	$ 0.0001
Common stock, authorized	250,000,000	250,000,000
Common stock, issued	249,447,433	249,447,433
Common stock, outstanding	249,447,433	249,447,433

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Sales revenue	$ 7,279	$ 206,592	$ 44,554	$ 305,147
Cost of goods sold	(3,075)	(105,953)	(20,394)	(158,007)
Gross profit	4,204	100,639	24,160	147,140
Operating expenses:
Research and development	75,153	70,615	143,757	143,606
Sales and marketing	1,263	26,596	2,262	39,311
General and administrative	201,377	256,427	379,489	607,202
Total operating expenses	277,793	353,638	525,508	790,119
Loss from operations	(273,589)	(252,999)	(501,348)	(642,979)
Other income (expense):
Interest expense	(584,927)	(418,051)	(1,128,339)	(881,500)
Other income	(9,467)	(37,894)	(55,213)	(75,051)
Other income (expense), net	(594,394)	(455,945)	(1,183,552)	(956,551)
Net loss	$ (867,983)	$ (708,944)	$ (1,684,900)	$ (1,599,530)
Net loss per common share:
Basic and diluted (in dollar per share)	$ 0	$ (0.01)	$ (0.01)	$ (0.01)
Weighted average common shares outstanding:
Basic and diluted (in shares)	249,447,433	135,528,338	249,447,433	126,788,863

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating Activities:
Net loss	$ (1,684,900)	$ (1,599,530)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt issuance costs and debt discount	301,615	196,612
Loss on conversion of debt		56,101
Changes in operating assets and liabilities:
Accounts receivable	(20,908)	(12,246)
Inventory	3,263	12,778
Prepaid expenses and other	(699)	1,293
Other assets	250	650
Accounts payable	109,730	524,183
Accrued liabilities	423,078	314,121
Net cash used in operating activities	(868,571)	(506,038)
Financing Activities:
Proceeds from debt	1,173,757	815,116
Payments of debt	(303,150)	(236,271)
Net cash provided by financing activities	870,607	578,845
Net change in cash	2,036	72,807
Cash, beginning of period	5,454	17,987
Cash, end of period	7,490	90,794
Cash paid for:
Interest	432,032	267,698
Taxes
Non-cash transactions:
Debt converted to common stock		36,800
Accrued liabilities converted to common stock		2,029
Debt issuance costs	$ 435,500	$ 177,973

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
Description of Business and Summary of Significant Accounting Policies	Note 1 — Description of Business and Summary of Significant Accounting Policies 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, Énergie LLC (hereinafter referred to as, “Énergie”). 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 Énergie. 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. Our 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 Arvada, Colorado, and we also maintain a production and assembly facility in Zeeland, Michigan. Basis of Presentation The accompanying condensed consolidated balance sheet as of June 30, 2017, 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 year ended December 31, 2016. Going Concern As shown in the accompanying condensed consolidated financial statements, we had an equity deficit of $14,985,827 and a working capital deficit of $14,832,027 as of June 30, 2017, and have reported net losses of $1,684,900 and $1,599,530 for the six months ended June 30, 2017 and 2016, 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 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. Recently Issued Accounting Pronouncements In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting (Topic 718) The Financial Accounting Standards Board and other entities have issued other new or modifications to, or interpretations of, existing accounting guidance during 2017. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.

Accounts receivable

Accounts receivable	6 Months Ended
	Jun. 30, 2017
Receivables [Abstract]
Accounts receivable	Note 2 — Accounts receivable The following is a summary of accounts receivable: June 30, December 31, 2016 Customer receivables $ 35,340 $ 14,432 Less: Allowance for uncollectible accounts (14,401 ) (14,401 ) $ 20,939 $ 31

Inventory

Inventory	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Inventory	Note 3 — Inventory The following is a summary of inventory: June 30, December 31, 2016 Raw materials $ 329,349 $ 332,612 Less: reserve (175,434 ) (175,434 ) $ 153,915 $ 157,178

Debt

Debt	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Debt	Note 4 — Debt Debt is comprised of the following: Description Note June 30, 2017 December 31, 2016 Line of credit A $ 47,000 $ 47,000 Note payable to distribution partner B 550,000 550,000 Investor debt C 371,507 371,507 Related party debt D 8,026,479 6,719,979 Other notes payable E 981,137 981,137 Cash draw notes F 223,383 211,076 Convertible promissory notes G 58,937 71,637 Total 10,258,443 8,952,336 Less: unamortized discount and debt issuance costs (414,440 ) (280,555 ) Debt, net of unamortized discount and debt issuance costs 9,844,003 8,671,781 Less: current portion (9,684,003 ) (8,451,781 ) Debt, long-term portion $ 160,000 $ 220,000 A – Line of Credit B Note payable to distribution partner C Investor Debt – June 30, 2017 December 31, 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% 113,720 113,720 various $ 371,507 $ 371,507 D Related Parties Debt – June 30, 2017 December 31, Interest Rate D1 $ 4,635,865 $ 4,635,865 various D3 34,888 34,888 12% D4 365,550 365,550 various D5 668,176 668,176 18% D6 2,322,000 1,024,500 6% Total $ 8,026,479 $ 6,719,979 D1 D3 D4 D5 D6 E Other Notes Payable – F – Cash draw agreements G Convertible promissory notes – Debt issuance costs of $414,440 are being amortized over the life of the respective notes.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 5 — Commitments and Contingencies To the best of the Company’s knowledge and belief, no current legal proceedings of merit are currently pending or threatened against the Company, other than those described in Note 4 (G).

Net Loss Per Share

Net Loss Per Share	6 Months Ended
	Jun. 30, 2017
Earnings Per Share [Abstract]
Net Loss Per Share	Note 6 — 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. There are no dilutive instruments outstanding during the three and six months ended June 30, 2017 and 2016.

Subsequent events

Subsequent events	6 Months Ended
	Jun. 30, 2017
Subsequent Events [Abstract]
Subsequent events	Note 7 — Subsequent Events There are no events subsequent to June 30, 2017 and up to the date of this filing that would require disclosure.

Description of Business and S13

Description of Business and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
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. Our 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 Arvada, Colorado, and we also maintain a production and assembly facility in Zeeland, Michigan.
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated balance sheet as of June 30, 2017, 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 year ended December 31, 2016.
Going Concern	Going Concern As shown in the accompanying condensed consolidated financial statements, we had an equity deficit of $14,985,827 and a working capital deficit of $14,832,027 as of June 30, 2017, and have reported net losses of $1,684,900 and $1,599,530 for the six months ended June 30, 2017 and 2016, 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 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.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting (Topic 718) The Financial Accounting Standards Board and other entities have issued other new or modifications to, or interpretations of, existing accounting guidance during 2017. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.

Accounts receivable (Tables)

Accounts receivable (Tables)	6 Months Ended
	Jun. 30, 2017
Receivables [Abstract]
Schedule of Accounts receivable	The following is a summary of accounts receivable: June 30, December 31, 2016 Customer receivables $ 35,340 $ 14,432 Less: Allowance for uncollectible accounts (14,401 ) (14,401 ) $ 20,939 $ 31

Inventory (Tables)

Inventory (Tables)	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Schedule of Inventory	The following is a summary of inventory: June 30, December 31, 2016 Raw materials $ 329,349 $ 332,612 Less: reserve (175,434 ) (175,434 ) $ 153,915 $ 157,178

Debt (Tables)

Debt (Tables)	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Schedule of Debt	Debt is comprised of the following: Description Note June 30, 2017 December 31, 2016 Line of credit A $ 47,000 $ 47,000 Note payable to distribution partner B 550,000 550,000 Investor debt C 371,507 371,507 Related party debt D 8,026,479 6,719,979 Other notes payable E 981,137 981,137 Cash draw notes F 223,383 211,076 Convertible promissory notes G 58,937 71,637 Total 10,258,443 8,952,336 Less: unamortized discount and debt issuance costs (414,440 ) (280,555 ) Debt, net of unamortized discount and debt issuance costs 9,844,003 8,671,781 Less: current portion (9,684,003 ) (8,451,781 ) Debt, long-term portion $ 160,000 $ 220,000
Schedule of Investor Debt	The following summarizes the terms and balances of the investor debt: June 30, 2017 December 31, 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% 113,720 113,720 various $ 371,507 $ 371,507
Schedule of Related Party Debt	The following summarizes notes payable to related parties: June 30, 2017 December 31, Interest Rate D1 $ 4,635,865 $ 4,635,865 various D3 34,888 34,888 12% D4 365,550 365,550 various D5 668,176 668,176 18% D6 2,322,000 1,024,500 6% Total $ 8,026,479 $ 6,719,979

Description of Business and S17

Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accounting Policies [Abstract]
Working Capital Deficit	$ 14,832,027		$ 14,832,027
Net Income Loss	$ (867,983)	$ (708,944)	$ (1,684,900)	$ (1,599,530)

Accounts receivable - Receivabl

Accounts receivable - Receivable (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Receivables [Abstract]
Customer receivables	$ 35,340	$ 14,432
Less: Allowance for uncollectible accounts	(14,401)	(14,401)
Receivables, Net	$ 20,939	$ 31

Inventory - Inventory (Details)

Inventory - Inventory (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 329,349	$ 332,612
Less: Reserve	(175,434)	(175,434)
Inventory, Net	$ 153,915	$ 157,178

Debt - Debt (Details)

Debt - Debt (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Line of credit	$ 47,000	$ 47,000
Note payable to distribution partner	550,000	550,000
Investor debt	371,507	371,507
Related party debt	8,026,479	6,719,979
Other notes payable	981,137	981,137
Cash draw notes	223,383	211,076
Convertible promissory notes	58,937	71,637
Total	10,258,443	8,952,336
Less: unamortized discount and debt issuance costs	(414,440)	(280,555)
Debt, net of unamortized discount and debt issuance costs	9,844,003	8,671,781
Less: current portion	(9,684,003)	(8,451,781)
Debt, long-term portion	$ 160,000	$ 220,000

Debt - Investor Debt (Details)

Debt - Investor Debt (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Investor Debt Balances	$ 10,258,443	$ 8,952,336
Investor Debt Total
Investor Debt Balances	371,507	371,507
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 6
Investor Debt Balances	$ 20,000	$ 20,000
Investor Debt, Interest Rate	2.00%	2.00%
Investor Debt 7
Investor Debt Balances	$ 113,720	$ 113,720

Debt - Realetd Party Debt (Deta

Debt - Realetd Party Debt (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
D5
Related Party Debt	$ 668,176	$ 668,176
Related Party Debt, Interest Rate	18.00%	18.00%
D6
Related Party Debt	$ 2,322,000	$ 1,024,500
Related Party Debt, Interest Rate	6.00%	6.00%
D3
Related Party Debt	$ 34,888	$ 34,888
Related Party Debt, Interest Rate	12.00%	12.00%
D1
Related Party Debt	$ 4,635,865	$ 4,635,865
D4
Related Party Debt	365,550	365,550
Related Party Total
Related Party Debt	$ 8,026,479	$ 6,719,979