ExeLED (ELED) 10-Q 20 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 20, 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	Sep. 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	Q3
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 1,048	$ 5,454
Accounts receivable, net	2,425	31
Inventory	151,843	157,178
Due from related parties	21,270
Prepaid expenses and other	59,576	48,307
Total current assets	236,162	210,970
Noncurrent assets:
Deposits	6,200	6,450
Total assets	242,362	217,420
Current liabilities:
Accounts payable	3,176,957	2,988,439
Accrued liabilities	2,483,691	1,858,127
Debt, current portion, net of discount and debt issuance costs	10,446,841	8,451,781
Total current liabilities	16,107,489	13,298,347
Debt, long-term portion	130,000	220,000
Total liabilities	16,237,489	13,518,347
Commitments and contingencies (Note 6)
Equity:
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2017 or December 31, 2016
Common stock, $.0001 par value; 250,000,000 shares authorized; 249,447,433 shares issued and outstanding at September 30, 2017 and December 31, 2016	24,743	24,743
Additional paid-in capital	2,635,896	2,635,896
Accumulated deficit	(18,655,766)	(15,961,566)
Total deficit	(15,995,127)	(13,300,927)
Total liabilities and equity	$ 242,362	$ 217,420

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollar per share)	$ .0001	$ .0001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value (in dollar per share)	$ .0001	$ .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		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Sales revenue	$ 5,167	$ 26,836	$ 49,721	$ 331,983
Cost of goods sold	(3,036)	(18,785)	(23,430)	(176,792)
Gross profit	2,131	8,051	26,291	155,191
Operating expenses:
Research and development	60,535	68,560	204,292	212,166
Sales and marketing	79	6,168	2,341	45,479
General and administrative	201,201	359,877	580,690	967,079
Total operating expenses	261,815	434,605	787,323	1,224,724
Loss from operations	(259,684)	(426,554)	(761,032)	(1,069,533)
Other income (expense):
Interest expense	(648,131)	(475,981)	(1,776,470)	(1,357,481)
Other income	(101,486)	(73,457)	(156,698)	(148,508)
Other income (expense), net	(749,617)	(549,438)	(1,933,168)	(1,505,989)
Net loss	$ (1,009,301)	$ (975,992)	$ (2,694,200)	$ (2,575,522)
Net loss per common share:
Basic and diluted (in dollar per share)	$ 0	$ (0.01)	$ (0.01)	$ (0.02)
Weighted average common shares outstanding:
Basic and diluted (in shares)	249,447,433	168,604,321	249,447,433	151,814,179

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating Activities:
Net loss	$ (2,694,200)	$ (2,575,522)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt issuance costs and debt discount	502,481	274,625
Loss on conversion of debt		114,791
Changes in operating assets and liabilities:
Accounts receivable	(2,394)	7,288
Inventory	5,335	18,997
Due from related parties	(21,270)
Prepaid expenses and other	(11,269)	(264)
Other assets	250	650
Accounts payable	188,518	763,451
Accrued liabilities	625,564	498,288
Net cash used in operating activities	(1,406,985)	(897,696)
Financing Activities:
Proceeds from debt	1,891,283	1,253,921
Payments of debt	(488,704)	(369,200)
Net cash provided by financing activities	1,402,579	884,721
Net change in cash	(4,406)	(12,975)
Cash, beginning of period	5,454	17,987
Cash, end of period	1,048	5,012
Cash paid for:
Interest	679,222	420,949
Taxes
Non-cash transactions:
Debt converted to common stock		82,800
Accrued liabilities converted to common stock		5,661
Debt issuance costs	$ 687,000	$ 363,473

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 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 September 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 $15,995,127 and a working capital deficit of $15,871,327 as of September 30, 2017, and have reported net losses of $2,694,200 and $2,575,522 for the nine months ended September 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 July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815) 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	9 Months Ended
	Sep. 30, 2017
Receivables [Abstract]
Accounts receivable	The following is a summary of accounts receivable: September 30, 2017 December 31, 2016 Customer receivables $ 37,806 $ 14,432 Less: Allowance for uncollectible accounts (35,381 ) (14,401 ) $ 2,425 $ 31

Inventory

Inventory	9 Months Ended
	Sep. 30, 2017
Inventory Disclosure [Abstract]
Inventory	Note 3 — Inventory The following is a summary of inventory: September 30, 2017 December 31, 2016 Raw materials $ 327,277 $ 332,612 Less: reserve (175,434 ) (175,434 ) $ 151,843 $ 157,178

Debt

Debt	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
Debt	Note 4 — Debt Debt is comprised of the following: Description Note September 30, 2017 December 31, 2016 Line of credit A $ 41,588 $ 47,000 Note payable to distribution partner B 550,000 550,000 Investor debt C 371,507 371,507 Related party debt D 8,777,979 6,719,979 Other notes payable E 981,137 981,137 Cash draw notes F 260,767 211,076 Convertible promissory notes G 58,937 71,637 Total 11,041,915 8,952,336 Less: unamortized discount and debt issuance costs (465,074 ) (280,555 ) Debt, net of unamortized discount and debt issuance costs 10,576,841 8,671,781 Less: current portion (10,446,841 ) (8,451,781 ) Debt, long-term portion $ 130,000 $ 220,000 A – Line of Credit – B – Note payable to distribution partner – C – Investor Debt – September 30, 2017 December 31, 2016 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 – September 30, 2017 December 31, 2016 Interest Rate D1 $ 4,635,865 $ 4,635,865 various D3 34,888 34,888 12 % D4 362,550 356,550 various D5 668,176 668,176 18 % D6 3,076,500 1,024,500 6 % Total $ 8,777,979 $ 6,719,979 D1 – D3 – D4 – D5 – D6 – E – Other Notes Payable – F – Cash draw agreements – G – Convertible promissory notes – Debt issuance costs of $465,074 are being amortized over the life of the respective notes.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2017
Notes to Financial Statements
Related Party Transactions	Note 5 — Related Party Transactions Parties are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. During the quarter ended September 30, 2017, the Company made payments totaling $21,270 on behalf of an entity related via common ownership. As of September 30, 2017, the Company had not been reimbursed for any of these expenses. See Note 4 for additional disclosures concerning debt due to related parties.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 6 — 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	9 Months Ended
	Sep. 30, 2017
Earnings Per Share [Abstract]
Net Loss Per Share	Note 7 — 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 nine months ended September 30, 2017 and 2016.

Subsequent events

Subsequent events	9 Months Ended
	Sep. 30, 2017
Subsequent Events [Abstract]
Subsequent events	Note 8 — Subsequent Events There are no events subsequent to September 30, 2017 and up to the date of this filing that would require disclosure.

Description of Business and S14

Description of Business and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 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 September 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 $15,995,127 and a working capital deficit of $15,871,327 as of September 30, 2017, and have reported net losses of $2,694,200 and $2,575,522 for the nine months ended September 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 July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815) 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)	9 Months Ended
	Sep. 30, 2017
Receivables [Abstract]
Schedule of Accounts receivable	September 30, 2017 December 31, 2016 Customer receivables $ 37,806 $ 14,432 Less: Allowance for uncollectible accounts (35,381 ) (14,401 ) $ 2,425 $ 31

Inventory (Tables)

Inventory (Tables)	9 Months Ended
	Sep. 30, 2017
Inventory Disclosure [Abstract]
Schedule of Inventory	September 30, 2017 December 31, 2016 Raw materials $ 327,277 $ 332,612 Less: reserve (175,434 ) (175,434 ) $ 151,843 $ 157,178

Debt (Tables)

Debt (Tables)	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
Schedule of Debt	Description Note September 30, 2017 December 31, 2016 Line of credit A $ 41,588 $ 47,000 Note payable to distribution partner B 550,000 550,000 Investor debt C 371,507 371,507 Related party debt D 8,777,979 6,719,979 Other notes payable E 981,137 981,137 Cash draw notes F 260,767 211,076 Convertible promissory notes G 58,937 71,637 Total 11,041,915 8,952,336 Less: unamortized discount and debt issuance costs (465,074 ) (280,555 ) Debt, net of unamortized discount and debt issuance costs 10,576,841 8,671,781 Less: current portion (10,446,841 ) (8,451,781 ) Debt, long-term portion $ 130,000 $ 220,000
Schedule of Investor Debt	September 30, 2017 December 31, 2016 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	September 30, 2017 December 31, 2016 Interest Rate D1 $ 4,635,865 $ 4,635,865 various D3 34,888 34,888 12 % D4 362,550 356,550 various D5 668,176 668,176 18 % D6 3,076,500 1,024,500 6 % Total $ 8,777,979 $ 6,719,979

Description of Business and S18

Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Accounting Policies [Abstract]
Net Income Loss	$ (1,009,301)	$ (975,992)	$ (2,694,200)	$ (2,575,522)

Accounts receivable - Receivabl

Accounts receivable - Receivable (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Receivables [Abstract]
Customer receivables	$ 37,806	$ 14,432
Less: Allowance for uncollectible accounts	(35,381)	(14,401)
Receivables, Net	$ 2,425	$ 31

Inventory - Inventory (Details)

Inventory - Inventory (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 327,277	$ 332,612
Less: Reserve	(175,434)	(175,434)
Inventory, Net	$ 151,843	$ 157,178

Debt - Debt (Details)

Debt - Debt (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Line of credit	$ 41,588	$ 47,000
Note payable to distribution partner	550,000	550,000
Investor debt	371,507	371,507
Related party debt	8,777,979	6,719,979
Other notes payable	981,137	981,137
Cash draw notes	260,767	211,076
Convertible promissory notes	58,937	71,637
Total	11,041,915	8,952,336
Less: unamortized discount and debt issuance costs	(465,074)	(280,555)
Debt, net of unamortized discount and debt issuance costs	10,576,841	8,671,781
Less: current portion	(10,446,841)	(8,451,781)
Debt, long-term portion	$ 130,000	$ 220,000

Debt - Investor Debt (Details)

Debt - Investor Debt (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Investor Debt Balances	$ 11,041,915	$ 8,952,336
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
Investor Debt Total
Investor Debt Balances	$ 371,507	$ 371,507

Debt - Realetd Party Debt (Deta

Debt - Realetd Party Debt (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
D3
Related Party Debt	$ 34,888	$ 34,888
Related Party Debt, Interest Rate	12.00%	12.00%
D5
Related Party Debt	$ 668,176	$ 356,550
Related Party Debt, Interest Rate	18.00%	18.00%
D6
Related Party Debt	$ 3,076,500	$ 1,024,500
Related Party Debt, Interest Rate	6.00%	6.00%
D1
Related Party Debt	$ 4,635,865	$ 4,635,865
D4
Related Party Debt	362,550	668,176
Related Party Total
Related Party Debt	$ 8,777,979	$ 6,719,979