Epoxy, Inc. - FORM 10-Q - November 19, 2014

Attached files

file	filename
EX-10.3 - AUGUST 22, 2014 LETTER AGREEMENT BETWEEN THE COMPANY AND QUARRY BAY EQUITY INC. - Epoxy, Inc.	ex103.htm
EX-10.6 - FORM OF STOCK OPTION AGREEMENT - Epoxy, Inc.	ex106.htm
EX-32.1 - CERTIFICATION - Epoxy, Inc.	ex321.htm
EX-10.7 - FORM OF STOCK AWARD AGREEMENT - Epoxy, Inc.	ex107.htm
EX-10.5 - 2014 STOCK OPTION AND AWARD PLAN - Epoxy, Inc.	ex105.htm
EX-10.9 - FORM OF NOTE - JSJ INVESTMENTS INC. - Epoxy, Inc.	ex109.htm
EX-1.4 - FORM OF EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND DAVID GASPARINE - Epoxy, Inc.	ex104.htm
EX-10.8 - FORM OF NOTE - LG CAPITAL FUNDING LLC - Epoxy, Inc.	ex108.htm
EX-31.2 - CERTIFICATION - Epoxy, Inc.	ex312.htm
EX-10.2 - FORM OF ADDENDUM BETWEEN THE COMPANY AND CERTAIN INVESTORS WITH CONVERTIBLE LOANS EXPIRING NOVEMBER 27, 2015 - Epoxy, Inc.	ex102.htm
EX-31.1 - CERTIFICATION - Epoxy, Inc.	ex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

	For the quarterly period ended September 30, 2014

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

	For the transition period from __________ to __________

000-53669
Commission File Number

EPOXY, INC.
(Exact name of registrant as specified in its charter)

Nevada	N/A
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

500N. Rainbow Blvd. Suite 300, Las Vegas, Nevada	89107
(Address of principal executive offices)	(Zip Code)

702-350-2449
(Registrant’s telephone number, including area code)

NEOHYDRO TECHNOLOGIES CORP
(Former name, former address and former fiscal year, if changed since last report)

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 [ ] No [ X ]

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 ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

176,594,122 shares of common stock outstanding as of November 19, 2014

(Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.)

EPOXY, INC.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10

Item 4.	Controls and Procedures	10

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	11

Item 1A.	Risk Factors	11

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11

Item 3.	Defaults Upon Senior Securities	11

Item 4.	Mine Safety Disclosures	11

Item 5.	Other Information	12

Item 6.	Exhibits	13

	SIGNATURES	14

EPOXY, INC.

(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

	Page
Unaudited Consolidated Balance Sheets as of September 30, 2014 and December 31,2013	F-1
Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013	F-2
Unaudited Consolidated Statement of Cash Flows for the nine months ended September 30, 2014 and 2013	F-3
Notes to the Unaudited Consolidated Financial Statements	F-4 to F-11

EPOXY, INC.

(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2014		December 31, 2013
ASSETS
Current
Cash	$	132,238	$	30,467
Accounts receivable		880		2,330
Total Current Assets		133,118		32,797

Trademark and Patent, net		7,695		7,695

Total Assets	$	140,813	$	40,492

LIABILITIES
Current
Accounts payable and accrued liabilities		75,252		64,401
Loan payable		32,000		63,573
Convertible notes, net of unamortized discount		27,833		-
Derivative liabilities		790,961		23,790
Total Current Liabilities		926,046		151,764

Convertible notes, net of unamortized discount		2,329		19,190

Total Liabilities		928,375		170,954

STOCKHOLDERS’ DEFICIT
Preferred Stock, $0.00001 par value;
authorized: 35,000,000 Series A Preferred shares, 25,080,985 issued and outstanding as of September 30, 2014 and December 31, 2013		251		251
authorized: 15,000,000 Series B Preferred shares, no shares issued and outstanding as of September 30, 2014 and December 31, 2013		-		-
Common Stock, $0.00001 par value;
authorized: 480,000,000 shares, 173,094,122 and 168,824,707 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively		1,731		1,688
Additional Paid-in Capital		(312,470)		152,689
Accumulated deficit		(477,074)		(285,090)
Total Stockholders’ Deficit		(787,562)		(130,462)
Total Liabilities and Stockholders’ Deficit	$	140,813	$	40,492

The accompanying notes are an integral part of these unaudited consolidated financial statements

F-1

EPOXY, INC.

(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three month ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013

Revenue	$	10,632		$	6,600		$	18,366		$	11,800

Operating Expenses
Professional fees		16,559			-			44,523			6,972
Software development expenses		9,960			13,327			24,136			32,307
Consulting fee		29,741			12			52,696			10,460
Financing costs		54,750			-			54,750			-
General and administrative expenses		18,662			2,128			37,254			28,262
Total operating expenses		129,672			15,467			213,359			78,001
Loss from operations		(119,040	)		(8,867	)		(194,993	)		(66,201	)

Other Income (Expenses):
Gain (Loss) on change in fair value of derivative liabilities		198,268			-			181,541			-
Loss on extinguishment of debt		(88,185)			-			(88,185)			-
Loss on debt settlement		(32,619	)		-			(32,619	)		-
Interest expenses		(6,006	)		-			(15,441	)		-
Accretion of discount on convertible notes		(27,615	)		-			(42,287	)		-
Total other expenses		43,843			-			3,009			-

Net loss	$	(75,197)			(8,867	)	$	(191,984)		$	(66,201	)

Net loss per share – basic and diluted	$	(0.00	)		(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average shares outstanding – basic and diluted		171,206,155			24,514,319			169,835,793			24,514,319

The accompanying notes are an integral part of these unaudited consolidated financial statements

F-2

EPOXY, INC.

(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months ended
	September 30,
	2014		2013
Cash flows from Operating Activities
Net loss	$	(191,984)	$	(66,201)
Adjustments to reconcile net loss to net cash used in operations:
Shares issued for financing costs		24,000		-
Loss on extinguishment of debt		88,185		-
Loss on debt settlement		32,619		-
(Gain)/loss on change in fair value of derivative liabilities		(181,541)		-
Accretion of discounts on convertible notes		42,287		-
Imputed interest		3,905		-
Foreign exchange in loan payable		(1,001)		-
Changes in operating assets and liabilities:
Accounts receivables		1,450		(1,500)
Accounts payable		10,851		(13,499)
Net cash used in operating activities		(171,229)		(81,200)

Cash flows from Financing Activities
Proceeds from sale of common stock		28,000		-
Proceeds from convertible notes		225,000
Proceeds from loan payable		20,000		81,532
Net cash provided by financing activities		273,000		81,532

Increase (decrease) in cash during the period		101,771		332
Cash, beginning of period		30,467		492
Cash, end of period	$	132,238	$	824

Supplemental disclosure of cash flow information:
Cash paid for:
Interest	$	2,986	$	-
Income taxes	$	-	$	-

Non-Cash Transactions
Shares and warrants reclassified as derivative liability	$	40,517	$	-
Debt discount on convertible debt due to beneficial conversion feature		125,000		-
Debt discount due to derivative		219,500		-
Derivative liability due to tainting of amended convertible notes		769,729		-
Shares issued for the settlement of debt		83,192		-

The accompanying notes are an integral part of these unaudited consolidated financial statements

F-3

EPOXY, INC.

(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Description of business and basis of presentation

Organization and nature of business

Neohydro Technologies Corp. (the “Company”) was incorporated in the State of Nevada on November 13, 2007 as Rioridge Resources Corp. On July 22, 2008, the Company changed its name to Neohydro Technologies Corp.

On August 1, 2014, the Company’s name changed from NeoHydro Technologies Corp. to Epoxy, Inc. in regard to actions taken on May 23, 2014, when the Board of Directors of the Company (the “Board”) approved, and recommended to the Majority Stockholders that they approve the Name Change. On May 27, 2014, the Majority Stockholders approved the Name Change by written consent in lieu of a meeting, in accordance with Nevada law. On August 4, 2014, the Company submitted the Name Change to FINRA for their review and approval, as well as the approval of a symbol change from NHYT to EPXY. The Company filed an amendment to our Articles of Incorporation with the Secretary of State of Nevada changing our name to Epoxy, Inc. effective on August 1, 2014.

The Company, through its wholly owned subsidiary, Couponz, Inc., is the developer of Epoxy app, an application or "app" for iPhone iOS and Android operating systems. Epoxy is an innovative smart phone application designed and created to conveniently connect business owners and consumers in order to ease marketing frustrations. The mobile app gives loyal customers the ease of keeping track of rewards and punch cards all in one place while also giving opportunities to review and share businesses with friends. In turn, Epoxy provides businesses the ability to reward customers, share offers, and deliver information about special events with their customers.

Financial Statements Presented

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the nine month period ended September 30, 2014, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2014. For further information refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 as filed with the Securities and Exchange Commission on April 15, 2014.

Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.

Note 2 – Going Concern

At September 30, 2014 and 2013, the Company had net losses of $191,984 and $66,201, respectively. The Company believes that its existing capital resources may not be adequate to enable it to execute its business plan. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The Company estimates that it will require additional cash resources during 2014 based on its current operating plan and condition. The Company expects cash flows from operating activities to improve, primarily as a result of an increase in revenue and a decrease in certain operating expenses, although there can be no assurance thereof. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.

Note 3 – Correction of an error

During the preparation of the quarterly report for the period ended March 31, 2014, the Company discovered an immaterial error related to its December 31, 2013 balance sheet. The error related to the valuation of an embedded derivative liability, in which the derivative liability was calculated using the wrong number of shares exceeding our authorized (see Note 7). The resulting error totaled $13,824. Pursuant to the Securities and Exchange Commission’s SAB Topic 108, the company has corrected this error in the accompanying December 31, 2013 balance sheet.

F-4

Note 3 – Correction of an error (continued)

The following table reflects the amounts originally reported and as adjusted for each major caption of the balance sheet:

	December 31, 2013 (As Adjusted)			December 31, 2013 (Original)
Consolidated Balance Sheets:
Derivative liabilities	$	23,790		$	37,614
Total Liabilities	$	170,954		$	184,778
Additional paid in capital	$	152,689		$	138,865
Total stockholders' deficit	$	(130,462	)	$	(144,286	)
Total liabilities and stockholders' deficit	$	40,492		$	40,492

Note 4- Fair Value Measurements

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument.

The following table provides a summary of the fair value of our derivative liabilities as of September 30, 2014 and December 31, 2013:

	Fair value measurements on a recurring basis
	Level 1		Level 2		Level 3
As of September 30, 2014:
Liabilities
Embedded derivative	$	-	$	-	$	790,961

As of December 31, 2013:
Liabilities
Embedded derivative	$	-	$	-	$	23,790

F-5

Note 5- Loans Payable

During the month of July 2014 the Company entered into 5% one-year promissory notes for a total of $20,000 with arm’s length third parties.

At September 30, 2014, the Company is indebted to related third parties for $20,000 (December 31, 2013 - $nil).

On August 22, 2014, the Company settled the unrelated third party debt in the amount of $50,572 (including USD$26,650 and CAD$26,075) by way of the issuance of 2,528,600 shares of the Company’s common stock at $0.02 per share. The fair market value per share of the Company’s common stock was $0.0329. The Company recognized loss on the debt settlement in the amount of $32,619.

At September 30, 2014, the Company is indebted to unrelated third parties for $12,000 (December 31, 2013 - $63,573 (including USD$38,650 and CAD$26,075)). The loan is non-interest bearing and is due on demand. During the nine months ended September 30, 2014, the Company recorded imputed interest of $3,905.

Note 6- Convertible Notes

(1)	Convertible notes due on November 27, 2015:

On November 27, 2012, the Company entered into certain convertible loan agreements with four (4) investors. The Company received a total of $125,000 which bears interest at 10% per annum and is due on November 27, 2015. Interest shall accrue from the advancement date and shall be payable quarterly. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of $0.0005 per share. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $125,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debentures up to its face value of total of $125,000.

The Company analyzed the conversion feature of above Convertible Notes for derivative accounting consideration under FASB ASC 470 and determined that the conversion feature did not create embedded derivatives.

The Company analyzed the above amendment under ASC 470-60 and concluded that the amendment to the conversion terms qualified as a substantial modification and as such the unamortized discount of $88,183 was recorded as loss on extinguishment of debt. The Company recalculated the intrinsic value of the embedded beneficial conversion feature of $125,000 this has been recorded at the discount on the convertible note. The carrying value will be accreted over the term of the convertible debentures up to its face value of total of $125,000.

F-6

Note 6- Convertible Notes (continued)

The carrying value of certain convertible notes is as follows:

	December 31, 2013			August 1, 2014			August 1, 2014 Recalculation			September 30, 2014
Face value of certain convertible notes	$	125,000		$	125,000		$	125,000		$	125,000
Less: unamortized discount		(105,810	)		(88,183	)		(125,000	)		(122,671	)
Carrying value	$	19,190			36,817		$	-		$	2,329

As at September 30, 2014, the carrying values of the convertible debenture and accrued convertible interest thereon were $2,329 and $23,014, respectively.

(2)	Convertible note due on August 22, 2015 and Convertible note due on April 16, 2015

On August 22, 2014, the Company entered into a convertible loan agreements with an investor (the “CN#1”). The Company received a total of $125,000 which bears interest at 8% per annum and is due on August 22, 2015. Interest shall accrue from the advancement date and shall be payable on August 22, 2015. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price equal to 52% of the lowest trading price of the Common Stock as reported on the OTCQB exchange for the twelve (12) prior trading days including the day upon which a Notice of Conversion is received by the Company.

On September 17, 2014, the Company entered into a convertible loan agreements with an investor (the “CN#2). The Company received a total of $100,000 which bears interest at 10% per annum and is due on April 16, 2015. Interest shall accrue from the advancement date and shall be payable on April 16, 2015. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of the lower of (1) a 50% discount to the average of the three lowest daily trading prices for the previous twenty (20) trading days to the date of conversion; or (2) a 50% discount to the average of the three lowest daily trading prices for the previous twenty (20) trading days before the date that this note was executed.

In our evaluation of the financing arrangement, we concluded that the conversion features were not afforded the exemption as a conventional convertible instrument and it did not otherwise meet the conditions set forth in current accounting standards for equity classification. Accordingly, they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities. (See footnote 9 for derivative disclosure)

Additionally, the Company evaluated the convertible notes in note 6 (1) above and concluded that these are tainted due to the variable conversion rate of the above the convertible notes and as such they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities. (See footnote 9 for derivative disclosure)

	Commitment Date			September 30, 2014
Expected dividends		0			0
Expected volatility	218.59 ~ 219.26		%	215.76		%
Expect term	0.59 ~ 1 years			0.54~0.89 years
Risk free interest rate	0.10		%		0.03 ~ 0.11	%

Amortization of the discount over the three month and nine month period ended September 30, 2014 were $25,170 and $25,170 (September 30, 2013 - $nil), which amount has been recorded as interest expense and is reflected on the Company’s balance sheet as Convertible Note Liabilities, Net. The unamortized discount of $194,330 associated with CN#1 and CN#2 will be expensed in future periods.

F-7

Note 7 – Common stock

On April 30, 2014, the Company the Company received the final $28,000 installment in respect of a funding agreement entered into on June 17, 2013 (ref: Note 10) for a total of $100,000. The Company accepted a subscription for 933,333 shares of common stock at $0.03 per share for cash proceeds of $28,000 and the Company also agreed to issue a 2-year warrant entitling the holder to acquire an additional 93,333 and shares of common stock at an exercise price of $0.30 per share.

On August 8, 2014 the Company agreed to issue 500,000 fully paid for and earned restricted shares of the Company’s common stock under an agent agreement with Carter, Terry & Company (“C&T”). The Company recorded $15,000 as financing costs, which was the fair market value of the shares on the agreement date.

On August 22, 2014, the Company settled certain unrelated third party debt in the amount of $50,572 by way of the issuance of 2,528,600 shares of the Company’s common stock at $0.02 per share with a fair value of $83,192. The Company recognized loss on the debt settlement in the amount of $32,629.

During the period ended September 30, 2014 the Company agreed to issue a total of 307,482 restricted shares of the Company’s common stock under an agent agreement with C&T, which equal to the 4% of $225,000 capital raised divided by the closing price of the stock on the date of close.

Note 8 - Share Purchase Warrants

During the nine month period ended September 30, 2014 the Company issued a 2-year warrant entitling the holders to acquire an additional 93,333 shares of common stock at an exercise price of $0.30 per share as part of Funding Agreement described below in Note 10.

As September 30, 2014, the following share purchase warrants were outstanding:

	Warrants		Weighted Average Exercise Price
Outstanding - December 31, 2013		856,667		0.12
Granted		93,333		0.30
Forfeited/Canceled		-		-
Exercised		-		-
Outstanding – September 30, 2014		950,000		0.14
Exercisable – September 30, 2014		950,000		0.14

The intrinsic value of these warrants was $0 at September 30, 2014.

F-8

Note 9- Derivative Liabilities

(1)	Derivative liabilities from exceed authorized shares of common stock

As of June 30, 2014, accordingly, given the fact that the Company currently has 480,000,000 shares of common stock authorized, the Company could exceed its authorized shares of common stock by approximately 4,743,836 shares (December 31, 2013 – 3,717,169 shares) if all of the financial instruments described in the table above were exercised or converted into shares of common stock. At June 30, 2014, 4,743,836 of these shares were in excess of the authorized shares and were accounted for as a derivative liability. The fair value of these 4,743,836 common shares was determined to be $51,708 ($23,790 as to 3,717,168 shares as of December 31, 2013) using the closing price of Epoxy’s common stock.

On August 1, 2014 the Company successfully amended the terms of certain convertible loan agreements with four (4) investors for a total of $125,000 due and payable on November 27, 2015 (ref: Note 6). Under the amended terms, a total of $125,000 originally available for conversion into a total of 250,000,000 shares of common stock at $0.0005 per share has been amended to reflect a price of $0.005 per share for a total of 25,000,000 shares of common stock, if converted. As such a total of $40,517 was reclassified from derivative liability to additional paid in capital. On August 22, 2014, the Company entered into a convertible loan agreement with an investor (the “CN#1”) see below (1) which the Company concluded that these are tainted due to the variable conversion rate of the below convertible notes and as such they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities.

(2)	Derivative liabilities from convertible notes

Since equity classification is not available for the conversion feature, we were required to bifurcate the embedded conversion feature and carry it as a derivative liability, at fair value. Derivative financial instruments are carried initially and subsequently at their fair values.

We estimated the fair value of the compound derivative on the inception dates, and subsequently, using the Black-Scholes Merton valuation technique, adjusted for the effect of dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, and risk free rates) that are necessary to fair value complex compound derivate instruments.

F-9

Note 9- Derivative Liabilities (continued)

As a result of the application of ASC No. 815 in period ended September 30, 2014 and issue dates of August 22, 2014 and September 17, 2014; the fair value of the conversion feature is summarized as follows:

Balance at December 31, 2013	23,790
Debt discount	219,500
Derivative addition due to the tainting of convertible notes	769,729
Reclass of derivative to additional paid in capital	(40,517)
September 30, 2014 gain on change in fair value	(181,541)
Balance at September 30, 2014	790,961

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of September 30, 2014 and commitment date (August 22, 2014 and September 17, 2014):

	Commitment Date			September 30, 2014
Expected dividends		0			0
Expected volatility	218.59 ~ 219.26		%	215.76		%
Expect term	0.59 ~ 1 years			0.54~0.89 years
Risk free interest rate	0.10		%		0.03 ~ 0.11	%

Note 10 - Commitments

On June 17, 2013, the Company entered into a Funding Agreement whereby an investor agreed to purchase $100,000 worth of shares of common stock of the Company at $0.03 per share within 90 days (which may be extended by consent of both parties to 120 days) and receive a 2-year warrant for an additional $100,000 worth of shares at $0.30 per share. As of September 30, 2014, the Company has received a total of $100,000 under the Funding Agreement towards the committed purchase value, and issued the shares subequent to September 30, 2014.

On July 16, 2013 the Company entered into a second Funding Agreement whereby an investor agreed to purchase $17,000 worth of shares of common stock of the Company at $0.03 per share and receive a 2-year warrant for an additional $17,000 worth of shares at $0.03 per share. As of September 30, 2014, the Company had received $17,000 under the Funding Agreement and issued the shares subsequent to September 30, 2014.

F-10

Note 10 - Commitments (continued)

On August 8, 2014 the Company entered into an Agency Agreement (the “Agreement”) with Carter, Terry & Company (“C&T”) where under C&T will act as the Company’s exclusive Financial Advisor, Investment Bank and Placement Agent, on a "best efforts" basis for an initial period of 30 days, and then reverting to a non-exclusive financial advisor for the next twelve consecutive (12) months. Under the terms of the Agreement, C&T will receive 500,000, fully paid for and earned restricted shares of the Company’s common stock, which shares were issued subsequent to September 30, 2014. In addition, in respect of any introductions those results in financing for the Company C&T shall receive fees as follows:

	a.		10% of the amount for any equity or hybrid equity capital raised up to $2,000,000
	b.		8% of the amount for any equity or hybrid equity capital raised up to $5,000,000
	c.		6% of the amount for any equity or hybrid equity capital raised over $5,000,000

And;
	an amount of restricted shares equal to 4% of capital raised divided by the closing price of the stock on the date of close.

On August 22, 2014 and September 17, 2014 the Company raised $125,000 and $100,000, respectively, under two convertible notes and paid to C&T cash consideration of $22,500 as financing costs and issued 307,482 shares of the Company’s common stock subsequent to September 30, 2014 in consideration of $9,000 as financing costs.

Note 11 – Subsequent events

On October 17, 2014 the Company’s Board of Directors approved a 2014 Stock Option and Award Plan. Under the Stock Option and Award Plan, the Company granted Mr. Woywod, director of the Company, 500,000 stock awards and Mr. Harney, director of the Company, 3,000,000 stock awards, all of which were fully vested on the date of issue. The Company also granted Mr. Woywod 500,000 incentive stock options at an exercise price of $0.03 per share for a term of 2 years form the date of grant, which options also vested immediately.

F-11

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

This current report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.

In this report unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares of our capital stock.

The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the fiscal year ended December 31, 2013, as filed with the Securities and Exchange Commission on April 15, 2014, along with the accompanying notes. As used in this quarterly report, the terms "we", "us", "our", and the "Company" means Epoxy, Inc. (formerly Neohydro Technologies Corp.) and its wholly owned subsidiary Couponz, Inc.

Current Business

On July 19, 2013, the Company entered into an agreement to purchase Couponz, Inc. (“Couponz”), a company incorporated in the State of Nevada. Under the agreement, the Company had the right to acquire 100% of the ownership of Couponz, Inc. in exchange for the issuance of 24,514,319 shares of preferred stock of the Company and $100,000. The agreement provided for the preferred shares issued to be designated as 1 share of preferred to carry 15 shares of common voting rights and to be convertible into common shares on the basis of 2.5 shares of common for each 1 share of preferred. Mr. David Gasparine, the sole director of Epoxy Inc. (formerly NeoHydro Technologies Corp.), is also the controlling shareholder of Couponz, Inc., and, as such, the transaction is considered to be non-arm’s length. Mr. Gasparine became the controlling shareholder of the Company concurrent with the completion of the transaction.

On November 1, 2013, the Company completed the aforementioned transaction and Couponz, Inc. became a wholly owned subsidiary of the Company.

Couponz Inc. is the developer of Epoxy app, an application or "app" for iPhone iOS and Android operating systems. Epoxy is an innovative smart phone application designed and created to conveniently connect business owners and consumers in order to ease marketing frustrations. The mobile app gives loyal customers the ease of keeping track of rewards and punch cards all in one place while also giving opportunities to review and share businesses with friends. In turn, Epoxy provides businesses the ability to reward customers, share offers, and deliver information about special events with their customers. Epoxy designers are dedicated to providing a superior and easy-to-use product for business owners to reward loyal customers.

Our goal is to provide a simple and easy to use platform for consumers to find business information, including but not limited to product and service descriptions, promotions, loyalty programs, and customer reviews, as well as to provide business owners a simple and easy to use platform to promote their businesses to mobile app users. Through the use of research and development we will be able to continue evolving our platform and features provided for our users.

Epoxy, Couponz’s mobile app, is a “two-part” system that has a server that both a website and a mobile application access. The mobile app allows users to find local businesses that have an Epoxy membership. An app user can navigate to an individual business several ways. App users can find a specific business by searching for the specific name of the business, the category of the business or by the App users location and listed results on a Map View. App users can then filter the results of the businesses in the Map View by category. Once a business is chosen the app user is presented with a Business Landing Page or “BLP”. The BLP displays information about that specific business that the business owner has input including operating hours, locations, menus, phone numbers as well as marketing such as digital loyalty cards and coupons. Within the BLP app users can also create reviews or “Sticky Notes” about that individual business and review other Sticky Notes that have been previously created. When an app user opens a loyalty card or offer the app has a built in scanner that allows the staff to “punch” or “redeem” either offer. A loyalty card is scanned multiple times and once completely filled is valid for a specified offer from the business owner. The app user can collect or “save” filled loyalty cards to redeem at a later time. A coupon is a one-time use offer that once redeemed will disappear from the device and become de-active. A business needs no equipment as the scanner is built into the Epoxy application that is required to scan each unique QR code. Epoxy provides each business with their own unique code that is used to track each loyalty card and offer. Each time an app user redeems an offer or digitally receives a punch the system tracks that information and displays it on a website administration panel for the business owner to track.

The website serves as a merchant login where merchants can access an administration panel that allows them to create their BLP and add digital punch cards, offers, events a and send out direct messages to individuals or groups in real-time. The admin panel also will provide the merchants with analytics such as the number of recipients for these direct messages, the number of punch cards and offers that have been used as well as the individual customers who are recommending that particular business (the referral system is a pending patent). This will allow the merchant to distinguish between different levels of consumers and compensate accordingly. This also adds a level of security and accuracy to the loyalty and coupon program that is not practical with a paper system.

Our pricing for merchants is a simple flat membership fee of $99 a month, without any contracts. The mobile app is free for consumers to download, and is available on both Android and Apple platform.

We plan to expand geographically in stages. By the close of December 2015, we expect to grow beyond the Las Vegas market into the rest of the Southwestern United States. We have already begun this process with expansion into Southern California. Within two to three years (December 2016), we plan to expand into the Midwest, and within five years (December 2019) we plan to expand nationally. As we experience each stage of growth, we plan to increase our staff primarily through commission-based sales people, as opposed to salaried or hourly wage employees, thus minimizing the financial burden of each stage of expansion. We believe that this plan for expansion will also minimize the need for additional outside financing, as we plan to fund our growth primarily through the growth of our paying customer base.

Our primary philosophy is to provide excellent customer service to both app users and merchants, while utilizing feedback through our events, website and mobile app. The mobile application platform gives us an opportunity to seamlessly receive feedback while providing a service. Once feedback has been provided we can then study and then apply this to the system. We believe if you keep the marketing simple, to the point and clean people will be willing to listen and convert. Once a customer is willing to listen, they can be turned into more valuable, loyal customers.

Couponz’s product is marketed to Mobile App Users as well as Business owners.

RESULTS OF OPERATIONS

The aforementioned business combination was accounted for as a reverse acquisition and recapitalization using accounting principles applicable to reverse acquisitions whereby the financial statements subsequent to the date of the transaction are presented as a continuation of Couponz. Under reverse acquisition accounting Couponz (subsidiary) is treated as the accounting parent (acquirer) and the Company (parent) is treated as the accounting subsidiary (acquiree). All outstanding shares have been restated to reflect the effect of the business combination. The historical financial statements (prior to November 1, 2013) in the consolidated financial statements are those of Couponz.

Three Months Ended September 30, 2014 Compared to the Three Months Ended September 30, 2013.

Our net loss for the three-month period ended September 30, 2014 and September 30, 2013 is as follows:

	Three month ended
	September 30,
	2014			2013

Revenue	$	10,632		$	6,600

Operating Expenses
Professional fees		16,559			-
Software development expenses		9,960			13,327
Consulting fee		29,741			12
Financing costs		54,750			-
General and administrative expenses		18,662			2,128
Total operating expenses		129,672			15,467
Loss from operations		(119,040	)		(8,867	)

Other Income (Expenses):
Gain on change in fair value of derivative liabilities		198,268			-
Loss on extinguishment of debt		(88,185)			-
Loss on debt settlement		(32,619	)		-
Interest expenses		(6,006	)		-
Accretion of discount on convertible notes		(27,615	)		-
Total other expenses		43,843			-

Net loss	$	(75,197	)		(8,867	)

During the comparative three month periods ended September 30, 2014 and 2013 the Company reported revenues of $10,632 and $6,600 respectively. The Company experienced an increase to professional fees and consulting fees during the most recent three months ended September 30, 2014 as we expanded our customer identification and cultivation plans to include increased marketing and advertising efforts, requiring more time from our key management and consultants.

Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013.

Our net loss for the nine month periods ended September 30, 2014 and September 30, 2013 is as follows:

	Nine months ended
	September 30,
	2014			2013

Revenue	$	18,366		$	11,800

Operating Expenses
Professional fees		44,523			6,972
Software development expenses		24,136			32,307
Consulting fee		52,696			10,460
Financing costs		54,750			-
General and administrative expenses		37,254			28,262
Total operating expenses		213,359			78,001
Loss from operations		(194,993	)		(66,201	)

Other Income (Expenses):
Gain on change in fair value of derivative liabilities		181,541			-
Loss on extinguishment of debt		(88,185)			-
Loss on debt settlement		(32,619	)		-
Interest expenses		(15,441	)		-
Accretion of discount on convertible notes		(42,287	)		-
Total other expenses		3,009			-

Net loss	$	(191,984	)	$	(66,201	)

During the comparative nine month periods ended September 30, 2014 and 2013 the Company reported revenues of $18,366 and $11,800 respectively. The Company experienced a substantial increase to professional fees and consulting fees during the most recent nine months ended September 30, 2014 as we expanded our customer identification and cultivation plans to include increased marketing and advertising efforts, requiring more time from our key management and consultants. We also undertook a name change to better reflect our current business operation. In addition, we experienced a decrease period over period in software development expenses as our application platform is now fully developed and requires only updates and maintenance.

Liquidity and Financial Condition

Working Capital

	At September 30, 2014			At December 31, 2013
Current Assets	$	133,118		$	32,797
Current Liabilities	$	926,046		$	151,764
Working Capital (Deficit)	$	(792,928	)	$	(118,967	)

Cash Flows

Cash Flows
	Nine Month Periods Ended
	September 30, 2014			September 30, 2013
Net cash used in operating activities	$	(171,229	)	$	(81,200	)
Net cash provided by financing activities	$	273,000		$	81,532
Net increase (decrease) in cash during period	$	101,771		$	332

Operating Activities

Net cash used in operating activities was $171,229 for the nine month period ended September 30, 2014 compared with cash used in operating activities of $81,200 in the same period in 2013. The increase in cash used in operating activities is predominantly attributable to various non-cash reconciliation adjustments including accretion of debt discount on convertible notes and the change in the fair value of our derivative liabilities, as well as increases to accounts payable and accrued expenses period over period as we were not able to retire our obligations as they became due.

Investing Activities

There were no investing activities during the nine months ended September 30, 2014 and 2013.

Financing Activities

Net cash provided by financing activities was $273,000 for the nine month period ended September 30, 2014 compared to $81,532 of cash provided in the same period in 2013.

Going Concern

We believe that presently we have sufficient funds to operate for the coming 12 months. Future operating activities are expected to be funded by revenues, the exercise of outstanding warrants or new loans and equity financing opportunities. We have no assurance that future financing will be available to us in the future on satisfactory terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our activities. Equity financing could result in additional dilution to existing shareholders.

Our Company has generated $18,366 (2014) and $11,800 (2013) in revenue in the respective nine month periods ended September 30, which amounts are not presently sufficient to cover our ongoing quarterly operating expenses. We have never paid dividends and it is unlikely we will generate sufficient earnings in the immediate or foreseeable future to meet our operational overhead. The continuation of our Company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at September 30, 2014, we had a working capital deficit of $792,928 and have an accumulated deficit of $477,074. These factors raise substantial doubt regarding our company’s ability to continue as a going concern. The financial statements included herein do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our Company be unable to continue as a going concern.

During the next twelve months we expect to expend approximately $50,000 for operations of the Company in regard to the filing of reports with the requisite regulatory authorities and $75,000 as required with respect the operations of wholly-owned subsidiary, Couponz, Inc., including salaries and any ongoing software development expenses.

We may require additional working capital to fund our business objectives. There can be no assurance that any additional financing will be available or accessible on reasonable terms, either by way of an equity financing or debt. If we cannot raise any additional funding we may either have to suspend operations until we do raise the cash, or cease operations entirely.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements that will have a current or future effect on our financial condition and changes in financial condition.

Critical Accounting Policies and Estimates

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company and are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings and is not aware of any pending legal proceedings as of the date of this Form 10-Q.

ITEM 1A. RISK FACTORS

The Company is a smaller reporting company and is not required to provide this information.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On August 22, 2014, the Company settled certain unrelated third party debt in the amount of $50,572 by way of issuance of 2,528,600 shares of the Company’s common stock at $0.02 per share. The shares were issued on November 17, 2014.

During the period ended September 30, 2014 the Company agreed to issue a total of 307,482 restricted shares of the Company’s common stock under an agent agreement with C&T. The shares were issued on November 17, 2014.

The Company will claim an exemption from the registration requirements of the Securities Act of 1933, as amended, for the issuance of the aforementioned shares pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company does not have any senior securities as of the date of this Form 10-Q.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

On August 8, 2014 the Company entered into an Agency Agreement (the “Agreement”) with Carter, Terry & Company (“C&T”) where under C&T will act as the Company’s exclusive Financial Advisor, Investment Bank and Placement Agent, on a "best efforts" basis for an initial period of 30 days, and then reverting to a non-exclusive financial advisor for the next twelve consecutive (12) months. Under the terms of the Agreement, C&T will receive 500,000, fully paid for and earned, restricted shares of the Compnay’s common stock. In addition, in respect of any introductions that result in financing for the Company C&T shall receive fees as follows:

	a.		10% of the amount for any equity or hybrid equity capital raised up to $2,000,000
	b.		8% of the amount for any equity or hybrid equity capital raised up to $5,000,000

6% of the amount for any equity or hybrid equity capital raised over $5,000,000

And;

an amount of restricted shares equal to 4% of capital raised divided by the closing price of the stock on the date of close.

On August 22, 2014 the Company and Quarry Bay Equity Inc. (“QB”) entered into a letter agreement whereunder QB agreed to settle outstanding debt totaling US$50,572 for a total of 2,528,600 shares at $0.02 per share.

On August 22, 2014, the Company entered into a convertible loan agreement with an investor. The Company received a total of $125,000 which bears interest at 8% per annum and is due on August 22, 2015. Interest shall accrue from the advancement date and shall be payable on August 22, 2015. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price equal to 52% of the lowest trading price of the Common Stock as reported on the OTCQB exchange for the twelve (12) prior trading days including the day upon which a Notice of Conversion is received by the Company.

On August 28, 2014 the Company and its President and CEO Mr. David Gasparine entered into an employment contract (the “Contract”) effective September 1, 2014 for a term of one year whereunder Mr. Gasparine will receive an annual salary of $36,000. In addition Mr. Gasparine received a signing bonus of $5,000 upon signing of the Contract.

On September 17, 2014, the Company entered into a convertible loan agreement with an investor. The Company received a total of $100,000 which bears interest at 10% per annum and is due on April 16, 2015. Interest shall accrue from the advancement date and shall be payable on April 16, 2015. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of the lower of (1) a 50% discount to the average of the three lowest daily trading prices for the previous twenty (20) trading days to the date of conversion; or (2) a 50% discount to the average of the three lowest daily trading prices for the previous twenty (20) trading days before the date that this note was executed.

ITEM 6. EXHIBITS

			Incorporated by reference
Exhibit	Exhibit Description	Filed herewith	Form	Exhibit	Filing Date
3.1	Articles of Incorporation		S-1	3.1	03/18/08
3.2	By-laws as currently in effect		S-1	3.2	03/18/08
10.1	Agency Agreement with Carter, Terry & Company executed August 8, 2014		10-Q	10.1	08/14/2014
10.2	Form of Addendum between the Company and certain investors with convertible loans expiring November 27, 2015	X
10.3	August 22, 2014 letter agreement between the Company and Quarry Bay Equity Inc.	X
10.4	Form of employment agreement between the Company and David Gasparine	X
10.5	2014 Stock Option and Award Plan	X
10.6	Form of Stock Option Agreement	X
10.7	Form of Stock Award Agreement	X
10.8	Form of Note - LG Capital Funding LLC	X
10.9	Form of Note - JSJ Investments Inc.	X
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act	X
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act	X
32.1	Certification of Principal Executive and Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act	X

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	EPOXY, INC. (FORMERLY NEOHYRDO TECHNOLOGIES CORP.)

Date: November 19, 2014	By:	/s/ David Gasparine
	Name:	David Gasparine
	Title:	Chief Executive Officer (Principal Executive Officer), Treasurer, (Principal Financial Officer) Secretary, and Director

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