10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One) 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________.

Commission file number: 000-28562

ENERGIE HOLDINGS INC.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	94-2857548 (I.R.S. Employer Identification No.)
4885 Ward Road, Suite 300, Wheat Ridge, CO (Address of principal executive offices)	80033 (Zip Code)

Registrant’s telephone number, including area code: (720) 963-8055

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [ ]	Smaller reporting company [X]
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of May 11, 2015, there were 59,505,676 shares of common stock, $0.0001 par value, issued and outstanding.

 ENERGIE HOLDINGS INC.

Table of Contents

Part I – FINANCIAL INFORMATION
Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	14
Item 4.	Controls and Procedures	14
Part II – OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 1A.	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults upon Senior Securities	14
Item 5.	Other Information	14
Item 6.	Exhibits	15

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements.

Factors that may cause or contribute actual results to differ from these forward-looking statements include, but are not limited to, for example:

• adverse economic conditions;

• risks related to the construction market;

• risks related to the U.S. import market;

• the inability to attract and retain qualified senior management and technical personnel;

• other risks and uncertainties related to the changing lighting market and our business strategy.

All forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements or other information contained herein. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements in this report are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from expectations under “Risk Factors” and elsewhere in this current report. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

Table of Contents 1

PART I. Financial Information

Item 1. Financial Statements

ENERGIE HOLDINGS INC.

Condensed Consolidated Balance Sheets

	March 31, 2015 (Unaudited)			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	2,643		$	43,879
Accounts receivable, net		16,695			27,337
Inventory, net		249,281			248,662
Prepaid expenses and other		52,788			68,291
Total current assets		321,407			388,169
Noncurrent assets:
Other assets		33,929			22,611
Total noncurrent assets		33,929			22,611
Total assets	$	355,336		$	410,780
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,606,362		$	2,228,645
Accrued liabilities		682,593			572,973
Debt, current portion		2,741,275			2,373,307
Total current liabilities		6,030,230			5,174,925
Debt, long-term portion		2,574,750			2,893,214
Total liabilities		8,604,980			8,068,139
Commitments and contingencies (Note 6)		—			—
Equity:
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2015 or December 31, 2014		—			—
Common stock, $.0001 par value; 250,000,000 shares authorized; 56,124,359 shares issued and outstanding at March 31, 2015		5,412			5,182
Additional paid-in capital		1,867,942			1,848,172
Accumulated deficit		(10,122,998	)		(9,510,713	)
Total deficit		(8,249,644	)		(7,657,359	)
Total liabilities and equity	$	355,336		$	410,780

 See accompanying notes to condensed consolidated financial statements.

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ENERGIE HOLDINGS INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended March 31,
	2015			2014
Sales revenue	$	202,395		$	164,609
Cost of goods sold		(98,006	)		(76,823	)
Gross profit		104,389			87,786
Operating expenses:
Research and development		56,870			46,558
Sales and marketing		43,470			37,114
General and administrative		405,705			502,112
Total operating expenses		506,045			585,784
Loss from operations		(401,656	)		(497,998	)
Other income (expense):
Interest expense		(200,360	)		(87,570	)
Other		(10,269	)		33,245
Other income (expense), net		(210,629	)		54,325
Net loss	$	(612,285	)	$	(552,323	)
Net loss per common share (Note 8):
Basic and diluted	$	(0.01	)	$	(0.02	)
Weighted average common shares outstanding:
Basic and diluted		54,560,257			32,339,542

See accompanying notes to condensed consolidated financial statements 

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ENERGIE HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended March 31,
	2015			2014
Operating Activities:
Net loss	$	(612,285	)	$	(552,323	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization		—			42,254
Amortization of debt issuance costs		(6,332	)		—
Common stock issued for services		5,000			—
Expense converted to debt		—			87,570
Changes in operating assets and liabilities (net of Share Exchange):
Accounts receivable		10,642			(38,665	)
Inventory		(619	)		9,962
Prepaid expenses and other		10,517			7,005
Accounts payable		377,717			252,105
Accrued liabilities		109,620			10,217
Net cash used in operating activities		(105,740	)		(181,875	)
Investing Activities:
Intangible assets		—			(5,928	)
Financing Activities:
Proceeds from debt		280,250			246,994
Payments of debt		(215,746	)		—
Member activity		—			(86,649	)
Net cash provided by financing activities		64,504			160,345
Net change in cash		(41,236	)		(27,458	)
Cash, beginning of period		43,879			37,874
Cash, end of period	$	2,643		$	10,416
Cash paid for: Interest	$	77,685		$	—
Debt converted to common stock	$	15,000		$	—

See accompanying notes to condensed consolidated financial statements.

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ENERGIE HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements

Note 1 — Description of Business and Summary of Significant Accounting Policies

Formation of the Company

On December 31, 2013, Energie Holdings, Inc. (“we,” “us,” “our,” the “Company”, “Energie” or “Holdings”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with OELC, LLC, a Delaware limited liability company, and its wholly-owned subsidiary, Energie LLC (hereinafter referred to as, “Energie”). The Share Exchange Agreement was not effective until July 2, 2014, due to a variety of conditions subsequent that needed to be met which were met or waived. Upon effectiveness, Holdings issued 33,000,000 “restricted” shares of its common stock, representing approximately 65% of the then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Energie. This transaction is considered to be a capital transaction, rather than a business combination, equivalent to the issuance of ownership interests by Energie for the net assets of Holdings, accompanied by a recapitalization (the “Share Exchange”). The accounting is identical to that resulting from a reverse acquisition, except that no goodwill or other intangible is recorded.

Thereafter, on January 27, 2014, Holdings entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two of its then wholly owned subsidiaries, Energie Holdings and Alas Acquisition Company (“Alas”). The Merger Agreement effectively merged Alas with and into Holdings, with Holdings being the surviving corporation. The net effect of the Merger Agreement was to effectuate a name change from Alas Aviation Corp., to Energie Holdings, Inc. in order to provide a better understanding to investors of the Company’s entry into the LED lighting industry. The Company’s management also changed.

Description of Business

We are focused on acquiring and growing specialized LED lighting companies for the architecture and interior design markets for both commercial and residential applications. The lighting products include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Our objective is to grow, innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lighting.

Énergie was founded in 2001 and is engaged in the import and sale of specialized interior lighting solutions to the architecture and interior design markets in North America. Our headquarters is located in Wheat Ridge, Colorado, and we also maintain a production and assembly facility in Zeeland, Michigan.

Basis of Presentation

As a result of the Share Exchange, Energie is considered to be the “accounting acquirer” and, accordingly, is treated as the predecessor company. The condensed consolidated financial statements include the results of operations and financial position of Energie for all periods, and the results of operations and financial position of Holdings as of and for the three months ended March 31, 2015 and as of December 31, 2014.

The accompanying condensed consolidated balance sheet as of December 31, 2014, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the period ended December 31, 2014.

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Going Concern

As shown in the accompanying financial statements, we had an equity deficit of $8,249,644 and a working capital deficit of $5,708,823 as of March 31, 2015, and have reported net losses of $612,285 and $552,323 for the three months ended March 31, 2015 and 2014, respectively.  These factors raise substantial doubt regarding our ability to continue as a going concern. 

Our ability to continue as a going concern is dependent on our ability to further implement our business plan, attract additional capital and, ultimately, upon our ability to develop future profitable operations. We intend to fund our business development, acquisition endeavors and operations through equity and debt financing arrangements. However, there can be no assurance that these arrangements will be sufficient to fund our ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time. These matters raise substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Recently Issued Accounting Pronouncements

In January 2015, the FASB issued ASU No. 2015-01 (ASU 2015-01), Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates the concept of extraordinary items from U.S. GAAP. The FASB released the new guidance as part of its simplification initiative, which, as explained in the ASU, is intended to identify, evaluate and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. We do not expect the impact of the adoption of ASU 2015-01 to be material to our consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02 (ASU 2015-02), Consolidation (Topic 810) – Amendments to the Consolidation Analysis. ASU 2015-02 focuses on the consolidation evaluation for reporting organizations (public and private companies and not-for-profit organizations) that are required to evaluate whether they should consolidate certain legal entities. We do not expect the impact of the adoption of ASU 2015-02 to be material to our consolidated financial statements.

Note 2 — Recapitalization

On July 2, 2014, we completed the Share Exchange Agreement with Energie. The impact to equity of the Share Exchange includes a) the issuance of 33,000,000 shares of Holdings’ common stock at $0.05 per share, the closing price of Holdings’ stock on December 31, 2013, the date of the Share Exchange Agreement, for total consideration effectively transferred of $1,650,000; and b) removing Holdings’ accumulated deficit and adjusting equity for the recapitalization.

The accompanying condensed consolidated statements of operations include the results of the Share Exchange Agreement from the share exchange date of July 2, 2014. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2014 are as follows:

	Three months ended March 31, 2014
Pro forma results:
Total net revenues	$	164,609
Net loss		(725,748	)
Net loss per common share:
Basic and diluted	$	(0.01	)

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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	)

Note 3 — Accounts receivable

The following is a summary of accounts receivable:

	March 31, 2015			December 31, 2014
Customer receivables	$	29,575		$	41,234
Less:  Allowance for uncollectible accounts		(12,880	)		(13,897	)
	$	16,695		$	27,337

Note 4 — Inventory

The following is a summary of inventory:

	March 31, 2015			December 31, 2014
Raw materials	$	362,962		$	420,424
Less: reserve		(113,681	)		(171,762	)
	$	249,281		$	248,662

Note 5 — Debt

Debt is comprised of the following:

Description	Note		March 31, 2015		December 31, 2014
Line of credit		A	$	47,000	$	47,000
Note payable to distribution partner		B		560,000		580,000
Investor debt		C		267,787		267,787
Related party debt		D		3,982,499		3,840,749
Other notes payable		E		55,286		57,692
Cash draw notes		F		200,953		255,793
Convertible promissory notes		G		202,500		217,500
Total				5,316,025		5,266,521
Less:  current portion				2,741,275		2,373,307
Debt, long-term portion			$	2,574,750	$	2,893,214

A – Line of Credit – We utilized this bank line of credit for working capital purposes. The outstanding obligation is due on demand, has a stated initial interest rate of 10.5% that is subject to adjustment, and is guaranteed by our majority shareholder.

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B – Note payable to distribution partner – Note payable to a significant European distribution partner, entered into in October 2014, bearing interest at 5% payable quarterly, with principal payable monthly through September 2019. The 2014 note payable aggregated the 2007 promissory note, accrued interest and accounts payable.

C – Investor Debt – Notes payable to lenders having an ownership interest in Holdings at March 31, 2015 and December 31, 2014. These loans are not collateralized. The following summarizes the terms and balances of the investor debt:

	March 31, 2015		December 31, 2014	Interest Rate
$	87,787	$	87,787	24%
	50,000		50,000	24%
	50,000		50,000	24%
	25,000		25,000	8%
	25,000		25,000	8%
	20,000		20,000	2%
	10,000		10,000	24%
$	267,787	$	267,787

D –Related Parties Debt – The following summarizes notes payable to related parties:

	March 31, 2015		December 31, 2014		Interest Rate
D1	$	3,254,231	$	3,152,231		6%
D2		519,380		497,130		12%
D3		34,888		34,888		12%
D4		174,000		156,500		24%
Total	$	3,982,499	$	3,840,749

D1 – Notes payable to Symbiote, Inc. (“Symbiote”), entered into in December 2014, with monthly principal and interest payable through November 2017. The 2014 notes aggregated the previous notes payable, accrued interest and accounts payable. The 2014 notes are not 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 the largest ownership percentage in Holdings, is the lessor of our manufacturing facility, and the provider of our payroll services.

We evaluated the agreement for derivatives and determined that it does not qualify for derivative treatment for financial reporting purposes, because the agreement relates to our own equity, and the debt and the equity are not closely related. We also determined this does not qualify as a beneficial conversion feature.

D2 – Note payable to an executive vice president, entered into in December 2014, with monthly principal and interest payable through November 2017. The 2014 note aggregated the previous note payable, accrued interest and accounts payable.

D3 – Note payable to our Chief Executive Officer (“CEO”), entered into in December 2014, with monthly principal and interest payable through November 2015.

D4 – Notes payable to the spouse of our CEO, due upon demand.

E – Other Notes Payable – Represents the outstanding principal balance on two separate notes bearing interest at approximately 12% annually. In the event we receive proceeds as the beneficiary of a life insurance policy covering our majority shareholder, repayment of principal and interest is due on these notes prior to using the proceeds for any other purpose.

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F – Cash draw agreements – Under these agreements, the lender advances us the principal balance and then automatically withdraws a stated amount each business day. Accordingly, there is no stated interest rate. The total remaining daily payments due under these arrangements was $251,189 as of March 31, 2015. The maturity dates of the agreements range from April to October 2015.

G – Convertible promissory notes – Represents the outstanding principal balance on separate convertible promissory notes to two entities with interest of 8% annually, due at various dates ranging from May through December 2015. At the option of the holders, the notes may be settled in cash or converted into shares of our common stock at any time beginning 180 days from the date of the notes at a price equal to 61% of the average closing bid price of our common stock during the 10 trading days immediately preceding the date of conversion. In the event we fail to pay the notes when they become due, the balance due under the notes incurs interest at the rate of 22% per annum. The notes contain additional terms and conditions normally included in instruments of this kind, including a right of first refusal wherein we have granted the holders the right to match the terms of any future financing in which we engage on the same terms and contemplated in such future financing. We estimate that the fair value of the conversion feature is minimal, so no value has been assigned to the beneficial conversion feature. During the quarter ended March 31, 2015, one of the lenders converted $15,000 of principal into 2,307,692 shares of common stock.

Note 6 — Contingencies

Current management discovered that the Company’s former management recorded various obligations to itself and to third parties for expenditures not deemed benefitting the Company or authorized by the Company’s sole director, as required. The amount of these unauthorized expenditures totaled $91,172, including $60,000 in management fees. These expenditures were reversed and are not part of the accompanying financial statements.  While current management believes that none of the $91,172 is an obligation of ours, it is not known what representations were made to these vendors or whether we could, in fact, be eventually responsible to pay some or all of the indicated amount.

Note 7 — Subsequent Events

There are no events subsequent to March 31, 2015 and up to the date of this filing that would require disclosure.

Note 8 — Net Loss Per Share

Basic net loss per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted net loss per share is computed similarly to basic net loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised. Since Energie, the “predecessor company,” was an LLC, it did not have common shares outstanding prior to the Share Exchange on July 2, 2014. Accordingly, we have prepared the calculation of Net Loss Per Share using the weighted-average number of common shares of Holdings that were outstanding during the three months ended March 31, 2015. Additionally, Holdings did not exist in 2013, so we have used the weighted-average number of common shares of Holdings that were outstanding for the three months ended March 31, 2015, so that a comparison of net loss per share may be presented.

The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted:

	Three months ended March 31,
		2015		2014
Net loss	$	(612,285	)	$	(552,323	)
Weighted average outstanding shares of common stock		54,560,257			32,339,542
Dilutive effect of stock options and warrants		—			—
Common stock and equivalents		54,560,257			32,339,542
Net loss per share – Basic and diluted	$	(0.01	)	$	(0.02	)

There are no dilutive instruments outstanding during the three months ended March 31, 2015.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

Overview

On December 31, 2013, Energie Holdings, Inc. (“we,” “us,” “our,” the “Company”, “Energie” or “Holdings”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with OELC, LLC, a Delaware limited liability company, and its wholly-owned subsidiary, Energie LLC (hereinafter referred to as, “Energie”). The Share Exchange Agreement was not effective until July 2, 2014, due to a variety of conditions subsequent that needed to be met which were met or waived. Upon effectiveness, Holdings issued 33,000,000 “restricted” shares of its common stock, representing approximately 65% of the then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Energie. This transaction is considered to be a capital transaction, rather than a business combination, equivalent to the issuance of ownership interests by Energie for the net assets of Holdings, accompanied by a recapitalization (the “Share Exchange”). The accounting is identical to that resulting from a reverse acquisition, except that no goodwill or other intangible is recorded.

Thereafter, on January 27, 2014, Holdings entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two of its then wholly owned subsidiaries, Energie Holdings and Alas Acquisition Company (“Alas”). The Merger Agreement effectively merged Alas with and into Holdings, with Holdings being the surviving corporation. The net effect of the Merger Agreement was to effectuate a name change from Alas Aviation Corp., to Energie Holdings, Inc. in order to provide a better understanding to investors of the Company’s entry into the LED lighting industry. The Company’s management also changed. On February 13, 2014, our trading symbol changed to “ELED” to reflect the change in our name and plan of operations.

We are focused on growing and acquiring specialized LED lighting companies for the architecture and interior design markets for both commercial and residential interiors. The lighting products will 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. Our management team and advisory board is comprised of experienced executives in the lighting industry with recent specific focus on the LED lighting industry. This group has over 300 years of combined experience in this industry.

Énergie was founded in 2001and is engaged in the import and sale of specialized interior lighting solutions to the architecture and interior design markets in North America. We have developed an end-to-end production and distribution platform for imported lighting products featuring HID, fluorescent, and LED technologies. Long term contracts with five European manufacturers and one in Taiwan provide us with exclusive North American distribution rights to over 270 total products in 37 categories. After processing any modifications necessary to meet UL standards and building code requirements, the products are sold to customers through a network of over 60 independent lighting sales agents. In addition to a 15% commission structure, we provide our sales force with promotional materials, product training, and technical support.

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Our principal place of business is located at 4885 Ward Road, Suite 300, Wheat Ridge, Colorado, telephone (720) 963-8055. We also maintain a production and assembly facility in Zeeland, Michigan. Our website is www.energieholdings.com.

As a result of the Share Exchange, Energie is considered to be the “accounting acquirer” and, accordingly, is treated as the predecessor company. The condensed consolidated financial statements include the results of operations and financial position of Energie for all periods, and the results of operations and financial position of Holdings as of and for the three months ended March 31, 2015 and as of December 31, 2014.

Our independent accountants have expressed a "going concern" opinion. Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

Results of Operations

Comparison of results of operations for the three months ended March 31, 2015 and 2014

	Three months ended March 31,
	2015			2014			Change			%
Sales revenue	$	202,395		$	164,609		$	37,786			23	%
Cost of revenue		(98,006	)		(76,823	)		(21,183	)		28	%
Gross profit		104,389			87,786			16,603			19	%
Total operating expenses		506,045			585,784			(79,739	)		(14	)%
Interest expense		(200,360	)		(87,570	)		(112,790	)		129	%
Other income (expense)		(10,269	)		33,245			(43,514	)		(131	)%
Net loss	$	(612,285	)	$	(552,323	)	$	(59,962	)		11	%

Sales Revenue, Cost of Revenue and Gross Profit

Sales revenue, cost of revenue and gross profit each increased for the three months ended March 31, 2015, as compared to the same period in 2014, as a result of increased borrowings which allowed us to increase our funding of revenue generating activities.

Operating expenses

	Three months ended March 31,
	2015		2014		Change			%
Research and development	$	56,870	$	46,558	$	10,312			22	%
Sales and marketing		43,470		37,114		6,356			17	%
General and administrative		405,705		502,112		(96,407	)		(19	)%
	$	506,045	$	585,784	$	(79,739	)		(14	)%

Operating expenses for the three months ended March 31, 2015, as compared to the same period in 2014, decreased primarily due to a) expense relating to the Merger and Share Exchange that occurred in 2014 which did not occur during 2015; and b) the absence of depreciation and amortization of property, plant and equipment and intangible assets as those assets were fully impaired in the fourth quarter of 2014.

Table of Contents 11

Other

Increased interest expense resulted from our increase of debt to approximately $5,300,000, an increase of approximately $1,000,000 over 2014 levels. We have been using debt financing to provide supplemental cash to fund our operations.

Other income (expense) consisted of bank fees and expenses associated with factoring our accounts receivable, which had decreased activity in the three month period ended March 31, 2015, compared to the same period in 2014, as we move towards collecting our receivables rather than factoring them. In addition, we received additional management fees in 2014 as compared to the similar three month period ended March 31, 2015.

Liquidity and Capital Resources

At March 31, 2015, we had $2,643 in cash. We have not generated positive cash flows from operations. Accordingly, our sources of liquidity may include potential debt and/or equity offerings. We believe that our principal difficulty in our inability to successfully generate positive cash flows has been the lack of available capital to operate and expand our business. We believe we need a minimum of approximately $1,500,000 in additional working capital to be utilized for a) development and launching of new products for Energie; b) funding the business development efforts to identify, qualify and acquire other LED lighting companies; and c) the balance for working capital, and general and administrative expense. While we are in discussions with various potential financing groups, other than as disclosed below, we have no other commitments from any investor or investment-banking firm to provide us with the necessary funding and there can be no assurances we will obtain such funding in the future. Failure to obtain this additional financing will have a material negative impact on our ability to generate profits in the future.

To fund our acquisition plan and fund working capital for our continuing operations, we are continuing to seek out and discuss financing with potential partners or lenders. While no assurances can be provided, we expect that we will be able to obtain financing to implement our plans.

On July 16, 2014 we entered into an Investment Agreement and Registration Rights Agreement with Dutchess Opportunity Fund, II, LP (“Dutchess”). Pursuant to the Investment Agreement, Dutchess committed to purchase, subject to certain restrictions and conditions, up to $5 million of our Common Stock upon issuance by us of a put to Dutchess at a price equal to ninety-four percent (94%) of the lowest daily VWAP (volume weighted average price) of our Common Stock during the five (5) consecutive Trading Days beginning on the Put Notice Date and ending on and including the date that is four (4) Trading Days after such Put Notice Date. The Put Amount shall be equal to up to either 1) two hundred percent (200%) of the average daily volume (U.S. market only) of the Common Stock for the three (3) Trading Days prior to the applicable Put Notice Date, multiplied by the average of the three (3) daily closing prices immediately preceding the Put Date or 2) one hundred thousand dollars ($100,000). The obligation of Dutchess to purchase our shares is contingent upon our filing of a registration statement registering the shares of our Common Stock with the US Securities and Exchange Commission and such registration statement being declared effective, as well as our common stock continuing to be listed for trading, among other things. We filed such a registration statement with the SEC on October 6, 2014 and it became effective on November 7, 2014.

Also, in the second half of 2014, we entered into four Securities Purchase Agreements with KBM Worldwide, Inc., (“KBM”) wherein we agreed to issue 8% convertible promissory notes in the principal amount of $182,500. The notes may be converted into shares of our Common Stock at any time beginning 180 days from the date of the notes at a price equal to 61% of the average closing bid price of our Common Stock during the 10 trading days immediately preceding the date of conversion. In the event we fail to pay the notes when they become due, the balance due under the notes incur interest at the rate of 22% per annum. The notes contain additional terms and conditions normally included in instruments of this kind, including a right of first refusal wherein we have granted KBM the right to match the terms of any future financing in which we engage on the same terms and contemplated in such future financing. During the quarter ended March 31, 2015, KBM converted $15,000 of principal into 2,307,692 shares of our Common Stock.

Table of Contents 12

In December 2014 we entered into a Securities Purchase Agreement, Convertible Note and other ancillary documents with LG Capital Funding LLC, (“LG”) wherein we agreed to issue an 8% convertible promissory note in the principal amount of $35,000. The note is convertible into shares of our Common Stock at any time beginning 180 days from the date of the note at a price equal to 65% of the lowest closing bid price of our Common Stock during the 15 trading days immediately preceding the date of conversion. The note contains additional terms and conditions normally included in instruments of this kind.

Working Capital

Working capital is the amount by which current assets exceed current liabilities. We had negative working capital of $5,708,823 and $4,786,756, respectively, as of March 31, 2015 and December 31, 2014. The increase in negative working capital is due to the increase in debt and resulting increase in accrued liabilities of approximately $110,000 associated with an increase in interest expense. The growth in accounts payable of approximately $375,000 is associated with increased operating expenses. We also currently have insufficient cash flow to meet our debt obligations. This raises substantial doubt about our ability to continue as a going concern.

Cash Flows

Our cash flows from operating, investing and financing activities were as follows:

	Three months ended March 31,
	2015			2014
Net cash used in operating activities	$	(105,740	)	$	(181,875	)
Net cash used in investing activities		—			(5,928	)
Net cash provided by financing activities		64,504			160,345

Net cash from operating activities was driven by our net loss, offset by an increase in accounts payable and unpaid interest expense. We anticipate that overhead costs in current operations will increase in the future if we are successful in raising the capital described herein as a result of our anticipated increased marketing and operating activities.

There was no net cash used in investing activities during the three month period ended March 31, 2015.  

Net cash from financing activities related to additional borrowings under existing debt agreements.

Inflation

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the three-month period ended March 31, 2015.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of March 31, 2015 and December 31, 2014.

Critical Accounting Estimates

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed consolidated financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended December 31, 2014 in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Table of Contents 13

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have carried out an evaluation of the effectiveness of the design and operation of our Company’s disclosure controls and procedures as of March 31, 2015.   This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer.

Based on this evaluation, our CEO and CFO have concluded that our Company's disclosure controls and procedures were not effective as of March 31, 2015, because (a) we have limited entity-level controls, because of the time constraints for our management team; (b) we have a lack of segregation of duties due to limited personnel; and (c) we have not implemented adequate system-based and manual controls.  We have engaged consultants to evaluate our processes and procedures, and to implement, document and test additional internal controls. We can provide no assurance, however, that our internal controls will be effective in the near future.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

PART II. Other Information

Item 1. Legal Proceedings

We are not currently a party to any legal proceeding, nor are we aware of any threatened actions.

Item 1A. Risk Factors

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2015, one of our lenders converted $15,000 of a convertible promissory note into 2,307,692 of our common shares. We relied upon the exemption from registration provided by Section 4/2 of the Securities Act of 1993, as amended, to issue these shares.

Item 3. Defaults upon Senior Securities

None.

Item 5. Other Information

None.

Table of Contents 14

Item 6. Exhibits

31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32	Chief Executive Officer and Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Table of Contents 15

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:  May 13, 2015	By:	/s/ Harold Hansen
		Harold Hansen
		Principal Executive Officer
	By:	/s/ Richard Cole Dennard
		Richard Cole Dennard
		Principal Accounting Officer

Table of Contents 16

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Harold Hansen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Energie Holdings Inc. (the “Registrant”) for the quarter ended March 31, 2015;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: May 13, 2015
		/s/ Harold Hansen
	By:	Harold Hansen
		Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Richard Cole Dennard, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Energie Holdings Inc. (the “Registrant”) for the quarter ended March 31, 2015;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: May 13, 2015
		/s/ Richard Cole Dennard
	By	Richard Cole Dennard
		Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Energie Holdings Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, the undersigned, in the capacities and on the date indicated below, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:

(1) The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 13, 2015
		/s/ Harold Hansen
	By:	Harold Hansen
		Chief Executive Officer (Principal Executive Officer)

Dated: May 13, 2015
		/s/ Richard Cole Dennard
	By:	Richard Cole Dennard
		Chief Financial Officer (Principal Financial and Accounting Officer)

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5. Debt - Debt (Details) (USD $)	Mar. 31, 2015		Dec. 31, 2014
Debt Disclosure [Abstract]
Line of credit	$ 47,000	[1]	$ 47,000	[1]
Note payable to distribution partner	560,000	[2]	580,000	[2]
Investor debt	267,787	[3]	267,787	[3]
Related party debt	3,982,499	[4]	3,840,749	[4]
Other notes payable	55,286	[5]	57,692	[5]
Cash draw agreements	200,953	[6]	255,793	[6]
Convertible promissory notes	202,500	[7]	217,500	[7]
Total	5,316,025		5,266,521
Less: current portion	2,741,275		2,373,307
Debt, long-term portion	$ 2,574,750		$ 2,893,214

[1] A - Line of Credit - We utilized this bank line of credit for working capital purposes. The outstanding obligation is due on demand, has a stated initial interest rate of 10.5% that is subject to adjustment, and is guaranteed by our majority shareholder.

[2] B - Note payable to distribution partner - Note payable to a significant European distribution partner, entered into in October 2014, bearing interest at 5% payable quarterly, with principal payable monthly through September 2019. The 2014 note payable aggregated the 2007 promissory note, accrued interest and accounts payable.

[3] C - Investor Debt - Notes payable to lenders having an ownership interest in Holdings at March 31, 2015 and December 31, 2014. These loans are not collateralized.

[4] D - Related Parties Debt - The following summarizes notes payable to related parties:

[5] E - Other Notes Payable - Represents the outstanding principal balance on two separate notes bearing interest at approximately 12% annually. In the event we receive proceeds as the beneficiary of a life insurance policy covering our majority shareholder, repayment of principal and interest is due on these notes prior to using the proceeds for any other purpose.

[6] F - Cash draw agreements - Under these agreements, the lender advances us the principal balance and then automatically withdraws a stated amount each business day. Accordingly, there is no stated interest rate. The total remaining daily payments due under these arrangements was $251,189 as of March 31, 2015. The maturity dates of the agreements range from April to October 2015.

[7] G - Convertible promissory notes - Represents the outstanding principal balance on separate convertible promissory notes to two entities with interest of 8% annually, due at various dates ranging from May through December 2015. At the option of the holders, the notes may be settled in cash or converted into shares of our common stock at any time beginning 180 days from the date of the notes at a price equal to 61% of the average closing bid price of our common stock during the 10 trading days immediately preceding the date of conversion. In the event we fail to pay the notes when they become due, the balance due under the notes incurs interest at the rate of 22% per annum. The notes contain additional terms and conditions normally included in instruments of this kind, including a right of first refusal wherein we have granted the holders the right to match the terms of any future financing in which we engage on the same terms and contemplated in such future financing. We estimate that the fair value of the conversion feature is minimal, so no value has been assigned to the beneficial conversion feature. During the quarter ended March 31, 2015, one of the lenders converted $15,000 of principal into 2,307,692 shares of common stock.

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4. Inventory

3 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

4. Inventory

Note 4 — Inventory

The following is a summary of inventory:

	March 31, 2015			December 31, 2014
Raw materials	$	362,962		$	420,424
Less: reserve		(113,681	)		(171,762	)
	$	249,281		$	248,662

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8. Net Loss Per Share - Net Loss Per Share (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Net loss	$ (612,285)	$ (552,323)
Weighted average outstanding shares of common stock	54,560,257	32,339,542
Dilutive effect of stock options and warrants
Common stock and equivalents	$ 54,560,257	$ 32,339,542
Net loss per share – Basic and diluted	$ (0.01)	$ (0.02)

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6. Contingencies (Details Narrative) (USD $)	Mar. 31, 2015
Unauthorized Expenditures
Unauthorized Expenditures	$ 91,172
Unauthorized Management Fees
Unauthorized Expenditures	$ 60,000

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3. Accounts receivable

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

3. Accounts receivable

Note 3 — Accounts receivable

The following is a summary of accounts receivable:

	March 31, 2015			December 31, 2014
Customer receivables	$	29,575		$	41,234
Less:  Allowance for uncollectible accounts		(12,880	)		(13,897	)
	$	16,695		$	27,337

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Balance Sheets (Unaudited) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 2,643	$ 43,879
Accounts receivable, net	16,695	27,337
Inventory, net	249,281	248,662
Prepaid expenses and other	52,788	68,291
Total current assets	321,407	388,169
Noncurrent assets:
Other assets	33,929	22,611
Total noncurrent assets	33,929	22,611
Total assets	355,336	410,780
Current liabilities:
Accounts payable	2,606,362	2,228,645
Accrued liabilities	682,593	572,973
Debt, current portion	2,741,275	2,373,307
Total current liabilities	6,030,230	5,174,925
Debt, long-term portion	2,574,750	2,893,214
Total liabilities	8,604,980	8,068,139
Commitments and contingencies (Note 6)
Equity:
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2015 or December 31, 2014
Common stock, $.0001 par value; 250,000,000 shares authorized; 56,124,359 shares issued and outstanding at March 31, 2015	5,412	5,182
Additional paid-in capital	1,867,942	1,848,172
Accumulated deficit	(10,122,998)	(9,510,713)
Total deficit	(8,249,644)	(7,657,359)
Total liabilities and equity	$ 355,336	$ 410,780

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1. Description of Business and Summary of Significant Accounting Policies

3 Months Ended

Mar. 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

On December 31, 2013, Energie Holdings, Inc. (“we,” “us,” “our,” the “Company”, “Energie” or “Holdings”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with OELC, LLC, a Delaware limited liability company, and its wholly-owned subsidiary, Energie LLC (hereinafter referred to as, “Energie”). The Share Exchange Agreement was not effective until July 2, 2014, due to a variety of conditions subsequent that needed to be met which were met or waived. Upon effectiveness, Holdings issued 33,000,000 “restricted” shares of its common stock, representing approximately 65% of the then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Energie. This transaction is considered to be a capital transaction, rather than a business combination, equivalent to the issuance of ownership interests by Energie for the net assets of Holdings, accompanied by a recapitalization (the “Share Exchange”). The accounting is identical to that resulting from a reverse acquisition, except that no goodwill or other intangible is recorded.

Thereafter, on January 27, 2014, Holdings entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two of its then wholly owned subsidiaries, Energie Holdings and Alas Acquisition Company (“Alas”). The Merger Agreement effectively merged Alas with and into Holdings, with Holdings being the surviving corporation. The net effect of the Merger Agreement was to effectuate a name change from Alas Aviation Corp., to Energie Holdings, Inc. in order to provide a better understanding to investors of the Company’s entry into the LED lighting industry. The Company’s management also changed.

Description of Business

We are focused on acquiring and growing specialized LED lighting companies for the architecture and interior design markets for both commercial and residential applications. The lighting products include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Our objective is to grow, innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lighting.

Énergie was founded in 2001 and is engaged in the import and sale of specialized interior lighting solutions to the architecture and interior design markets in North America. Our headquarters is located in Wheat Ridge, Colorado, and we also maintain a production and assembly facility in Zeeland, Michigan.

Basis of Presentation

As a result of the Share Exchange, Energie is considered to be the “accounting acquirer” and, accordingly, is treated as the predecessor company. The condensed consolidated financial statements include the results of operations and financial position of Energie for all periods, and the results of operations and financial position of Holdings as of and for the three months ended March 31, 2015 and as of December 31, 2014.

The accompanying condensed consolidated balance sheet as of December 31, 2014, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the period ended December 31, 2014.

Going Concern

As shown in the accompanying financial statements, we had an equity deficit of $8,249,644 and a working capital deficit of $5,708,823 as of March 31, 2015, and have reported net losses of $612,285 and $552,323 for the three months ended March 31, 2015 and 2014, respectively.  These factors raise substantial doubt regarding our ability to continue as a going concern. 

Our ability to continue as a going concern is dependent on our ability to further implement our business plan, attract additional capital and, ultimately, upon our ability to develop future profitable operations. We intend to fund our business development, acquisition endeavors and operations through equity and debt financing arrangements. However, there can be no assurance that these arrangements will be sufficient to fund our ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time. These matters raise substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Recently Issued Accounting Pronouncements

In January 2015, the FASB issued ASU No. 2015-01 (ASU 2015-01), Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates the concept of extraordinary items from U.S. GAAP. The FASB released the new guidance as part of its simplification initiative, which, as explained in the ASU, is intended to identify, evaluate and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. We do not expect the impact of the adoption of ASU 2015-01 to be material to our consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02 (ASU 2015-02), Consolidation (Topic 810) – Amendments to the Consolidation Analysis. ASU 2015-02 focuses on the consolidation evaluation for reporting organizations (public and private companies and not-for-profit organizations) that are required to evaluate whether they should consolidate certain legal entities. We do not expect the impact of the adoption of ASU 2015-02 to be material to our consolidated financial statements.

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2. Recapitalization (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2014
Business Combinations [Abstract]
Stock Issued in Share Exchange, Shares	33,000,000
Stock Issued in Share Exchange, Price Per Share	$ 0.05
Stock Issued in Share Exchange, Consideration Received	$ 1,650,000

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4. Inventory - Inventory (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 362,962	$ 420,424
Less: Reserve	(113,681)	(171,762)
Inventory, Net	$ 249,281	$ 248,662

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2. Recapitalization

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

2. Recapitalization

Note 2 — Recapitalization

On July 2, 2014, we completed the Share Exchange Agreement with Energie. The impact to equity of the Share Exchange includes a) the issuance of 33,000,000 shares of Holdings’ common stock at $0.05 per share, the closing price of Holdings’ stock on December 31, 2013, the date of the Share Exchange Agreement, for total consideration effectively transferred of $1,650,000; and b) removing Holdings’ accumulated deficit and adjusting equity for the recapitalization.

The accompanying condensed consolidated statements of operations include the results of the Share Exchange Agreement from the share exchange date of July 2, 2014. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2014 are as follows:

	Three months ended March 31, 2014
Pro forma results:
Total net revenues	$	164,609
Net loss		(725,748	)
Net loss per common share:
Basic and diluted	$	(0.01	)

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	)

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Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	56,124,359
Common stock, shares outstanding	56,124,359
Preferred Stock, Par Value	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	5,000,000	5,000,000

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4. Inventory (Tables)

3 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventory

	March 31, 2015			December 31, 2014
Raw materials	$	362,962		$	420,424
Less: reserve		(113,681	)		(171,762	)
	$	249,281		$	248,662

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 11, 2015
Document And Entity Information
Entity Registrant Name	Energie Holdings, Inc.
Entity Central Index Key	0000774937
Document Type	10-Q
Document Period End Date	Mar. 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 Common Stock, Shares Outstanding		59,505,676
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

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5. Debt (Tables)

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt

Description	Note		March 31, 2015		December 31, 2014
Line of credit		A	$	47,000	$	47,000
Note payable to distribution partner		B		560,000		580,000
Investor debt		C		267,787		267,787
Related party debt		D		3,982,499		3,840,749
Other notes payable		E		55,286		57,692
Cash draw notes		F		200,953		255,793
Convertible promissory notes		G		202,500		217,500
Total				5,316,025		5,266,521
Less:  current portion				2,741,275		2,373,307
Debt, long-term portion			$	2,574,750	$	2,893,214

Investor Debt

	March 31, 2015		December 31, 2014	Interest Rate
$	87,787	$	87,787	24%
	50,000		50,000	24%
	50,000		50,000	24%
	25,000		25,000	8%
	25,000		25,000	8%
	20,000		20,000	2%
	10,000		10,000	24%
$	267,787	$	267,787

Related Parties Debt

	March 31, 2015		December 31, 2014		Interest Rate
D1	$	3,254,231	$	3,152,231		6%
D2		519,380		497,130		12%
D3		34,888		34,888		12%
D4		174,000		156,500		24%
Total	$	3,982,499	$	3,840,749

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Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Sales revenue	$ 202,395	$ 164,609
Cost of goods sold	(98,006)	(76,823)
Gross profit	104,389	87,786
Operating expenses:
Research and development	56,870	46,558
Sales and marketing	43,470	37,114
General and administrative	405,705	502,112
Total operating expenses	506,045	585,784
Loss from operations	(401,656)	(497,998)
Other income (expense):
Interest expense	(200,360)	(87,570)
Other	(10,269)	33,245
Other income (expense), net	(210,629)	54,325
Net loss	$ (612,285)	$ (552,323)
Net loss per common share Basic and diluted	$ (0.01)	$ (0.02)
Weighted average common shares outstanding: Basic and diluted	54,560,257	32,339,542

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7. Subsequent Events

3 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

7. Subsequent Events

Note 7 — Subsequent Events

There are no events subsequent to March 31, 2015 and up to the date of this filing that would require disclosure.

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6. Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

6. Contingencies

Note 6 — Contingencies

Current management discovered that the Company’s former management recorded various obligations to itself and to third parties for expenditures not deemed benefitting the Company or authorized by the Company’s sole director, as required. The amount of these unauthorized expenditures totaled $91,172, including $60,000 in management fees. These expenditures were reversed and are not part of the accompanying financial statements.  While current management believes that none of the $91,172 is an obligation of ours, it is not known what representations were made to these vendors or whether we could, in fact, be eventually responsible to pay some or all of the indicated amount.

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3. Accounts receivable - Accounts Receivable (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Receivables [Abstract]
Customer receivables	$ 29,575	$ 41,234
Less: Allowance for uncollectible accounts	(12,880)	(13,897)
Receivables, Net	$ 16,695	$ 27,337

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8. Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Net Loss Per Share

	Three months ended March 31,
		2015		2014
Net loss	$	(612,285	)	$	(552,323	)
Weighted average outstanding shares of common stock		54,560,257			32,339,542
Dilutive effect of stock options and warrants		—			—
Common stock and equivalents		54,560,257			32,339,542
Net loss per share – Basic and diluted	$	(0.01	)	$	(0.02	)

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2. Recapitalization (Tables)

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Recapitalization

	Three months ended March 31, 2014
Pro forma results:
Total net revenues	$	164,609
Net loss		(725,748	)
Net loss per common share:
Basic and diluted	$	(0.01	)

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	)

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8. Net Loss Per Share

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

8. Net Loss Per Share

Note 8 — Net Loss Per Share

Basic net loss per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted net loss per share is computed similarly to basic net loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised. Since Energie, the “predecessor company,” was an LLC, it did not have common shares outstanding prior to the Share Exchange on July 2, 2014. Accordingly, we have prepared the calculation of Net Loss Per Share using the weighted-average number of common shares of Holdings that were outstanding during the three months ended March 31, 2015. Additionally, Holdings did not exist in 2013, so we have used the weighted-average number of common shares of Holdings that were outstanding for the three months ended March 31, 2015, so that a comparison of net loss per share may be presented.

The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted:

	Three months ended March 31,
		2015		2014
Net loss	$	(612,285	)	$	(552,323	)
Weighted average outstanding shares of common stock		54,560,257			32,339,542
Dilutive effect of stock options and warrants		—			—
Common stock and equivalents		54,560,257			32,339,542
Net loss per share – Basic and diluted	$	(0.01	)	$	(0.02	)

There are no dilutive instruments outstanding during the three months ended March 31, 2015.

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1. Description of Business and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Formation of the Company

Formation of the Company

On December 31, 2013, Energie Holdings, Inc. (“we,” “us,” “our,” the “Company”, “Energie” or “Holdings”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with OELC, LLC, a Delaware limited liability company, and its wholly-owned subsidiary, Energie LLC (hereinafter referred to as, “Energie”). The Share Exchange Agreement was not effective until July 2, 2014, due to a variety of conditions subsequent that needed to be met which were met or waived. Upon effectiveness, Holdings issued 33,000,000 “restricted” shares of its common stock, representing approximately 65% of the then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Energie. This transaction is considered to be a capital transaction, rather than a business combination, equivalent to the issuance of ownership interests by Energie for the net assets of Holdings, accompanied by a recapitalization (the “Share Exchange”). The accounting is identical to that resulting from a reverse acquisition, except that no goodwill or other intangible is recorded.

Thereafter, on January 27, 2014, Holdings entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two of its then wholly owned subsidiaries, Energie Holdings and Alas Acquisition Company (“Alas”). The Merger Agreement effectively merged Alas with and into Holdings, with Holdings being the surviving corporation. The net effect of the Merger Agreement was to effectuate a name change from Alas Aviation Corp., to Energie Holdings, Inc. in order to provide a better understanding to investors of the Company’s entry into the LED lighting industry. The Company’s management also changed.

Description of Business

Description of Business

We are focused on acquiring and growing specialized LED lighting companies for the architecture and interior design markets for both commercial and residential applications. The lighting products include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Our objective is to grow, innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lighting.

Énergie was founded in 2001 and is engaged in the import and sale of specialized interior lighting solutions to the architecture and interior design markets in North America. Our headquarters is located in Wheat Ridge, Colorado, and we also maintain a production and assembly facility in Zeeland, Michigan.

Basis of Presentation

Basis of Presentation

As a result of the Share Exchange, Energie is considered to be the “accounting acquirer” and, accordingly, is treated as the predecessor company. The condensed consolidated financial statements include the results of operations and financial position of Energie for all periods, and the results of operations and financial position of Holdings as of and for the three months ended March 31, 2015 and as of December 31, 2014.

The accompanying condensed consolidated balance sheet as of December 31, 2014, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the period ended December 31, 2014.

Going Concern

Going Concern

As shown in the accompanying financial statements, we had an equity deficit of $8,249,644 and a working capital deficit of $5,708,823 as of March 31, 2015, and have reported net losses of $612,285 and $552,323 for the three months ended March 31, 2015 and 2014, respectively.  These factors raise substantial doubt regarding our ability to continue as a going concern. 

Our ability to continue as a going concern is dependent on our ability to further implement our business plan, attract additional capital and, ultimately, upon our ability to develop future profitable operations. We intend to fund our business development, acquisition endeavors and operations through equity and debt financing arrangements. However, there can be no assurance that these arrangements will be sufficient to fund our ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time. These matters raise substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In January 2015, the FASB issued ASU No. 2015-01 (ASU 2015-01), Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates the concept of extraordinary items from U.S. GAAP. The FASB released the new guidance as part of its simplification initiative, which, as explained in the ASU, is intended to identify, evaluate and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. We do not expect the impact of the adoption of ASU 2015-01 to be material to our consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02 (ASU 2015-02), Consolidation (Topic 810) – Amendments to the Consolidation Analysis. ASU 2015-02 focuses on the consolidation evaluation for reporting organizations (public and private companies and not-for-profit organizations) that are required to evaluate whether they should consolidate certain legal entities. We do not expect the impact of the adoption of ASU 2015-02 to be material to our consolidated financial statements.

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3. Accounts receivable (Tables)

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Accounts Receivable

	March 31, 2015			December 31, 2014
Customer receivables	$	29,575		$	41,234
Less:  Allowance for uncollectible accounts		(12,880	)		(13,897	)
	$	16,695		$	27,337

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2. Recapitalization - Recapitalization (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Net loss	$ (612,285)	$ (552,323)
Net loss per common share - Basic and diluted	$ (0.01)	$ (0.02)
Accounts payable	2,606,362		2,228,645
Preferred stock
Common stock	5,412		5,182
Additional paid-in capital	1,867,942		1,848,172
Accumulated deficit	(10,122,998)		(9,510,713)
Total stockholders deficit	(8,249,644)		(7,657,359)
Pro Forma [Member]
Total net revenues	164,609
Net loss	(725,748)
Net loss per common share - Basic and diluted	$ (0.01)
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)

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5. Debt - Investor Debt (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Investor Debt Balances	$ 5,316,025	$ 5,266,521
Investor 1 [Member]
Investor Debt Balances	87,787	87,787
Investor Debt, Interest Rate	24.00%
Investor 2 [Member]
Investor Debt Balances	50,000	50,000
Investor Debt, Interest Rate	24.00%
Investor 3 [Member]
Investor Debt Balances	50,000	50,000
Investor Debt, Interest Rate	24.00%
Investor 4 [Member]
Investor Debt Balances	25,000	25,000
Investor Debt, Interest Rate	8.00%
Investor 5 [Member]
Investor Debt Balances	25,000	25,000
Investor Debt, Interest Rate	8.00%
Investor 6 [Member]
Investor Debt Balances	20,000	20,000
Investor Debt, Interest Rate	2.00%
Investor 7 [Member]
Investor Debt Balances	10,000	10,000
Investor Debt, Interest Rate	24.00%
Investor Debt Total [Member]
Investor Debt Balances	$ 267,787	$ 267,787

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Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Operating Activities:
Net loss	$ (612,285)	$ (552,323)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		42,254
Amortization of debt issuance costs	(6,332)
Common stock issued for services	5,000
Expense converted to debt		87,570
Changes in operating assets and liabilities (net of Share Exchange):
Accounts receivable	10,642	(38,665)
Inventory	(619)	9,962
Prepaid expenses and other	10,517	7,005
Accounts payable	377,717	252,105
Accrued liabilities	109,620	10,217
Net cash used in operating activities	(105,740)	(181,875)
Investing Activities:
Intangible assets		(5,928)
Financing Activities:
Proceeds from debt	280,250	246,994
Payments of debt	(215,746)
Member activity		(86,649)
Net cash provided by financing activities	64,504	160,345
Net change in cash	(41,236)	(27,458)
Cash, beginning of period	43,879	37,874
Cash, end of period	2,643	10,416
Cash paid for: Interest	77,685
Debt converted to common stock	$ 15,000

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5. Debt

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

5. Debt

Note 5 — Debt

Debt is comprised of the following:

Description	Note		March 31, 2015		December 31, 2014
Line of credit		A	$	47,000	$	47,000
Note payable to distribution partner		B		560,000		580,000
Investor debt		C		267,787		267,787
Related party debt		D		3,982,499		3,840,749
Other notes payable		E		55,286		57,692
Cash draw notes		F		200,953		255,793
Convertible promissory notes		G		202,500		217,500
Total				5,316,025		5,266,521
Less:  current portion				2,741,275		2,373,307
Debt, long-term portion			$	2,574,750	$	2,893,214

A – Line of Credit – We utilized this bank line of credit for working capital purposes. The outstanding obligation is due on demand, has a stated initial interest rate of 10.5% that is subject to adjustment, and is guaranteed by our majority shareholder.

B – Note payable to distribution partner – Note payable to a significant European distribution partner, entered into in October 2014, bearing interest at 5% payable quarterly, with principal payable monthly through September 2019. The 2014 note payable aggregated the 2007 promissory note, accrued interest and accounts payable.

C – Investor Debt – Notes payable to lenders having an ownership interest in Holdings at March 31, 2015 and December 31, 2014. These loans are not collateralized. The following summarizes the terms and balances of the investor debt:

	March 31, 2015		December 31, 2014	Interest Rate
$	87,787	$	87,787	24%
	50,000		50,000	24%
	50,000		50,000	24%
	25,000		25,000	8%
	25,000		25,000	8%
	20,000		20,000	2%
	10,000		10,000	24%
$	267,787	$	267,787

D –Related Parties Debt – The following summarizes notes payable to related parties:

	March 31, 2015		December 31, 2014		Interest Rate
D1	$	3,254,231	$	3,152,231		6%
D2		519,380		497,130		12%
D3		34,888		34,888		12%
D4		174,000		156,500		24%
Total	$	3,982,499	$	3,840,749

D1 – Notes payable to Symbiote, Inc. (“Symbiote”), entered into in December 2014, with monthly principal and interest payable through November 2017. The 2014 notes aggregated the previous notes payable, accrued interest and accounts payable. The 2014 notes are not 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 the largest ownership percentage in Holdings, is the lessor of our manufacturing facility, and the provider of our payroll services.

We evaluated the agreement for derivatives and determined that it does not qualify for derivative treatment for financial reporting purposes, because the agreement relates to our own equity, and the debt and the equity are not closely related. We also determined this does not qualify as a beneficial conversion feature.

D2 – Note payable to an executive vice president, entered into in December 2014, with monthly principal and interest payable through November 2017. The 2014 note aggregated the previous note payable, accrued interest and accounts payable.

D3 – Note payable to our Chief Executive Officer (“CEO”), entered into in December 2014, with monthly principal and interest payable through November 2015.

D4 – Notes payable to the spouse of our CEO, due upon demand.

E – Other Notes Payable – Represents the outstanding principal balance on two separate notes bearing interest at approximately 12% annually. In the event we receive proceeds as the beneficiary of a life insurance policy covering our majority shareholder, repayment of principal and interest is due on these notes prior to using the proceeds for any other purpose.

F – Cash draw agreements – Under these agreements, the lender advances us the principal balance and then automatically withdraws a stated amount each business day. Accordingly, there is no stated interest rate. The total remaining daily payments due under these arrangements was $251,189 as of March 31, 2015. The maturity dates of the agreements range from April to October 2015.

G – Convertible promissory notes – Represents the outstanding principal balance on separate convertible promissory notes to two entities with interest of 8% annually, due at various dates ranging from May through December 2015. At the option of the holders, the notes may be settled in cash or converted into shares of our common stock at any time beginning 180 days from the date of the notes at a price equal to 61% of the average closing bid price of our common stock during the 10 trading days immediately preceding the date of conversion. In the event we fail to pay the notes when they become due, the balance due under the notes incurs interest at the rate of 22% per annum. The notes contain additional terms and conditions normally included in instruments of this kind, including a right of first refusal wherein we have granted the holders the right to match the terms of any future financing in which we engage on the same terms and contemplated in such future financing. We estimate that the fair value of the conversion feature is minimal, so no value has been assigned to the beneficial conversion feature. During the quarter ended March 31, 2015, one of the lenders converted $15,000 of principal into 2,307,692 shares of common stock.

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5. Debt - Related Parties Debt (Details) (USD $)	3 Months Ended
	Mar. 31, 2015		Dec. 31, 2014
D 1 [Member]
Related Party Debt	$ 3,254,231	[1]	$ 3,152,231	[1]
Related Party Debt, Interest Rate	6.00%
D 2 [Member]
Related Party Debt	519,380	[2]	497,130	[2]
Related Party Debt, Interest Rate	12.00%
D 3 [Member]
Related Party Debt	34,888	[3]	34,888	[3]
Related Party Debt, Interest Rate	12.00%
D 4 [Member]
Related Party Debt	174,000	[4]	156,500	[4]
Related Party Debt, Interest Rate	24.00%
Related Party Debt Total [Member]
Related Party Debt	$ 3,982,499		$ 3,840,749

[1] D1 - Notes payable to Symbiote, Inc. (Symbiote), entered into in December 2014, with monthly principal and interest payable through November 2017. The 2014 notes aggregated the previous notes payable, accrued interest and accounts payable. The 2014 notes are not 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 the largest ownership percentage in Holdings, is the lessor of our manufacturing facility, and the provider of our payroll services. We evaluated the agreement for derivatives and determined that it does not qualify for derivative treatment for financial reporting purposes, because the agreement relates to our own equity, and the debt and the equity are not closely related. We also determined this does not qualify as a beneficial conversion feature.

[2] D2 - Note payable to an executive vice president, entered into in December 2014, with monthly principal and interest payable through November 2017. The 2014 note aggregated the previous note payable, accrued interest and accounts payable.

[3] D3 - Note payable to our Chief Executive Officer (CEO), entered into in December 2014, with monthly principal and interest payable through November 2015.

[4] D4 - Notes payable to the spouse of our CEO, due upon demand.

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1. Description of Business and Summary of Significant Accounting Policies (Details Narrative) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2014
Accounting Policies [Abstract]
Restricted Shares Issued in Share Exchange Agreement			33,000,000
Equity Deficit	$ (8,249,644)			$ (7,657,359)
Working Capital Deficit	5,708,823
Net Income Loss	$ (612,285)	$ (552,323)