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EX-31.2 - CERTIFICATION - Epoxy, Inc.ex312.htm
EX-32.1 - CERTIFICATION - Epoxy, Inc.ex321.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, 2015
   
[   ]  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.)
   
2518 Anthem Village Drive, Suite 100, Henderson NV
89052
(Address of principal executive offices)
(Zip Code)
 
702-350-2449
(Registrant’s  telephone number, including area code)
 
 
(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 [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 ]
 
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

 214,788,841 shares of common stock outstanding as of November 13, 2015
(Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.)



EPOXY, INC.

   
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
   8
     
Item 4.
Controls and Procedures
   8
     
 
PART II – OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
   9
     
Item 1A.
Risk Factors
   9
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
   9
     
Item 3.
Defaults Upon Senior Securities
   9
     
Item 4.
Mine Safety Disclosures
   10
     
Item 5.
Other Information
   10
     
Item 6.
Exhibits
  11
     
 
SIGNATURES
  12



EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

PART I -- FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS

 
Page
Unaudited Consolidated Balance Sheets as of September 30, 2015 and December 31,2014
F-1
Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014
F-2
Unaudited Consolidated Statement of Cash Flows for the nine months ended September 30, 2015 and 2014
F-3
Notes to the Unaudited Consolidated Financial Statements
F-4 to F-19



EPOXY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

   
September 30,
2015
   
December 31,
 2014
 
 ASSETS
           
Current
           
Cash
 
$
142,847
   
$
63,953
 
Accounts receivable
   
880
     
880
 
Prepaid expenses
   
3,420
     
-
 
Deferred financing costs
   
22,674
     
 -
 
Total Current Assets
   
169,821
     
64,833
 
                 
Vehicle
   
12,266
     
20,758
 
Trademark and Patent
   
7,695
     
7,695
 
                 
Total Assets
 
$
189,782
   
$
93,286
 
                 
LIABILITIES
               
Current
               
Accounts payable and accrued liabilities
 
112,664
   
104,213
 
Loans payable
   
32,000
     
32,000
 
Derivative liabilities
   
484,733
     
2,251,429
 
Convertible notes, net of unamortized discounts
   
203,838
     
105,067
 
Total Current Liabilities
   
833,235
     
2,492,709
 
                 
Total Liabilities
   
833,235
     
2,492,709
 
                 
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, 2015 and December 31, 2014
   
251
     
251
 
authorized: 15,000,000 Series B Preferred shares, no shares issued and outstanding as of September 30, 2015 and December 31, 2014
   
-
     
-
 
Common Stock, $0.00001 par value;
               
authorized: 480,000,000 shares, 212,481,149 and 176,594,122 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively
   
2,125
     
1,766
 
Additional paid-in capital
   
1,424,763
     
(168,477
)
Accumulated deficit
   
(2,070,592
)
   
(2,232,963
)
Total Stockholders’ Deficit
   
(643,453
)
   
(2,399,423
)
Total Liabilities and Stockholders’ Deficit
 
$
189,782
   
$
93,286
 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements
 


EPOXY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2015
   
2014
   
2015
   
2014
 
                         
Revenue
 
$
9,370
   
$
10,632
   
$
25,015
   
$
18,366
 
                                 
Operating Expenses
                               
Depreciation
   
2,831
     
-
     
8,492
     
-
 
General and administrative expenses
   
110,267
     
74,922
     
368,073
     
158,609
 
Total operating expenses
   
113,098
     
74,922
     
376,565
     
158,609
 
                                 
Loss from operations
   
(103,728
)
   
(64,290
)
   
(351,550
)
   
(140,243
)
                                 
Other Income (Expenses):
                               
Gain (loss) on change in fair value of derivative liabilities
   
162,548
     
198,268
     
483,519
     
181,541
 
Gain (loss) on debt settlement
   
512,393
     
(120,804
)
   
512,393
     
(120,804
)
Interest expenses
   
(162,802
)
   
(88,371
)
   
(481,991
)
   
(112,478
)
Total other income (expenses)
   
512,139
     
(10,907
)
   
513,921
     
(51,741
)
                                 
Net income (loss)
 
$
408,411
   
 $
(75,197
)
 
$
162,371
   
$
(191,984
)
                                 
Net income (loss) per share – basic
 
$
0.00
   
 $
(0.00
)
 
$
0.00
   
$
(0.00
)
Net income (loss) per share – diluted
 
$
0.00
   
$
(0.00
)
 
$
0.00
   
$
(0.00
)
                                 
Weighted average shares outstanding – basic
   
207,239,198
     
171,206,155
     
189,687,332
     
169,835,793
 
Weighted average shares outstanding – diluted
   
285,985,419
     
171,206,155
     
268,433,552
     
169,835,793
 


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


EPOXY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

   
Nine Months Ended
 
   
September 30,
 
   
2015
   
2014
 
Cash flows from Operating Activities
           
Net loss
 
$
162,371
   
$
(191,984
)
Adjustments to reconcile net loss to net cash used in operations:
               
Depreciation
   
8,492
     
-
 
Share issuance for financing costs
   
-
     
24,000
 
Share issuance for services
   
40,917
     
-
 
Loss on extinguishment of debt
   
(512,393
)
   
88,185
 
Los on debt settlement
   
-
     
32,619
 
(Gain) loss on change in fair value of derivative liabilities
   
(483,519
)
   
(181,541
)
Amortization of discounts on convertible notes
   
423,447
     
42,287
 
Amortization of deferred financing costs
   
34,326
     
-
 
Imputed interest
   
1,849
     
3,905
 
Foreign exchange in loan payable
   
-
     
(1,001
)
Changes in operating assets and liabilities:
               
Accounts receivables
   
-
     
1,450
 
Prepaid expenses
   
(3,420
)
   
-
 
Accrued expenses
   
18,823
     
-
 
Accounts payable
   
3,001
 
   
10,851
 
Net cash used in operating activities
   
(306,106
)
   
(171,229
)
                 
Cash flows from Financing Activities
               
Proceeds from sale of common stock
   
-
     
28,000
 
Proceeds from convertible notes
   
442,000
     
225,000
 
Deferred financing costs
   
(57,000
)
   
  -
 
Proceeds from loan payable
   
-
     
20,000
 
Net cash provided by financing activities
   
385,000
     
273,000
 
                 
Net decrease in cash during the period
   
78,894
     
101,771
 
Cash, beginning of period
   
63,953
     
30,467
 
Cash, end of period
 
$
142,847
   
$
132,238
 
                 
Supplemental disclosure of cash flow information:
               
Cash paid for:
               
    Interest
 
$
  -
   
$
2,986
 
    Income taxes
 
$
  -
   
$
-
 
                 
Supplemental non-cash investing activities:
               
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
 
Debt principal converted to shares
   
402,000
     
-
 
Accrued interest converted to shares
   
15,152
     
  -
 
Derivative liability reclassified as additional paid-in capital
   
1,133,681
     
  -
 
Derivative liability – debt discount
   
442,000
     
  -
 
The accompanying notes are an integral part of these unaudited consolidated financial statements


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 – Description of business and basis of presentation

Organization and nature of business

Epoxy, Inc. (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 furtherance of 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, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015.  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, 2014 as filed with the Securities and Exchange Commission on April 15, 2015.

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

Note 2 – Going Concern
 
For the nine months ended September 30, 2015, the Company used net cash in operations of $306,106. In addition, the Company had a working capital deficit as of September 30, 2015. 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 2015 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.


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 3- 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, 2015 and December 31, 2014:

   
Fair value measurements on a recurring basis
 
   
Level 1
   
Level 2
   
Level 3
 
As of September 30, 2015:
                       
Liabilities
                       
Derivative liabilities
 
$
-
   
$
-
   
$
484,733
 
                         
As of December 31, 2014:
                       
Liabilities
                       
Derivative liabilities
 
$
-
   
$
-
   
$
2,251,429
 
 
Note 4- Loans Payable

During the month of July 2014, the Company entered into two 5% one-year promissory notes for a total of $20,000.  At September 30, 2015, the Company is indebted to these unrelated third parties in the amount of $20,000 (December 31, 2014 - $20,000).

At September 30, 2015, the Company is indebted to two unrelated third parties for a total of $12,000 (December 31, 2014 - $12,000). The loans are non-interest bearing and due on demand after maturity. During the nine months ended September 30, 2015, the Company recorded imputed interest of $1,849 in respect of these loans.
 


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5- Convertible Notes

(1)  
Convertible notes originally 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.

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.  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. The Company determined that the amended qualified as a substantial modification under ASC 470-60.

On July 16, 2015, the Company amended the terms of the certain convertible loan agreements with four investors for a total of $125,000 due and payable on April 16, 2016. Under the amended terms, a total of $125,000 convertible notes which comes due and payable on November 27, 2015 is extended to the maturity date of April 16, 2016. In addition, the notes were modified whereby the do not become convertible until maturity.

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 $79,103 was recorded as loss on extinguishment of debt. In addition, the fair value of the derivative liabilities associated with the pre modification conversion option in these notes of $591,496 was extinguished resulting in a gain of $591,496. The net gain on extinguishment of liabilities during the nine months ended September 30, 2015 resulting from this substantial modification was $512,393.

The carrying value of certain convertible notes is as follows:
   
August 1, 2014
Recalculation
   
December 31,
 2014
   
September 30,
2015
 
Face value of certain convertible notes
 
$
125,000
   
$
125,000
   
$
125,000
 
Less: unamortized discount
   
(125,000
)
   
(116,702
)
   
-
 
Carrying value
 
$
-
     
8,298
   
$
125,000
 

As at September 30, 2015, the carrying values of the convertible debenture and accrued convertible interest thereon were $125,000 and $9,349, respectively. Amortization of the discounts associated with these notes was $37,599 during the nine months ended September 30, 2015.



EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5- Convertible Notes (continued)

(2)  
Convertible note due on August 22, 2015 (CN#1)

On August 22, 2014, the Company entered into a convertible loan agreements with an investor (the “CN#1”), where under the Company has issued two 8% convertible redeemable notes in the aggregate principal amount of $250,000 with the first note being $125,000 and the second note being $125,000, convertible into shares of the Company’s common stock upon the terms. 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 22, 2014, the Company received net proceeds totaling $106,250 in respect to the first of the two notes in the totaling gross amount of $125,000. Financing fees of $12,500 and legal fees of $6,250 were paid in respect of the back end note which is due and payable on August 22, 2015.

On January 15, 2015 and February 26, 2015 respectively the Company received net proceeds from an investor totaling $63,750 and $42,500 in respect to the second of the two notes in the total gross amount of $125,000.   Financing fees of $12,500 and legal fees of $6,250 were paid in respect of the back end note which is due and payable on August 22, 2015.

The following table reflects the issuance of 17,846,932 shares in respect of Conversion Notices received for a total of $250,000 in principal and $9,570 in accrued interest from CN#1 during the nine month period ended September 30, 2015:

Conversion Date
 
Original Principal Amount
($)
   
Accrued interest payable
($)
   
 
Conversion Price
($)
   
 
 
Number of shares issued
 
February 27, 2015
   
40,000
     
1,613
     
0.0364520
     
1,141,587
 
April 17, 2015
   
15,000
     
766
     
0.0239200
     
659,114
 
April 29, 2015
   
20,000
     
1,074
     
0.0208000
     
1,013,171
 
May 7, 2015
   
25,000
     
1,386
     
0.0130000
     
2,029,715
 
May 21, 2015
   
25,000
     
1,463
     
0.0130000
     
2,035,616
 
June 2, 2015
   
25,983
     
547
     
0.0141445
     
1,875,620
 
June 8, 2015
   
29,017
     
649
     
0.0141440
     
2,097,405
 
June 29, 2015
   
18,000
     
485
     
0.0145600
     
1,269,592
 
July 7, 2015
   
19,000
     
546
     
0.00936
     
2,088,197
 
July 20, 2015
   
33,000
     
1,041
     
0.00936
     
3,636,915
 
Total
   
250,000
     
9,570
             
17,846,932
 

As of September 30, 2015, the principal amount and all accrued interest payable with respect to CN#1 was paid in full with issuance of common stock.



EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5- Convertible Notes
(3)  
Convertible note due on April 16, 2015  (CN#2)

On September 17, 2014, the Company entered into a convertible loan agreements with an investor (the “CN#2). The Company received net proceeds totaling $88,000 from a note in the gross amount of $100,000 which bears interest at 10% per annum and is due on April 16, 2015. Financing fees of $10,500 and legal fees of $2,000 were paid in respect of the note which is due and payable on April 16, 2015. Interest shall accrue from the advancement date and shall be payable on maturity. 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.

The following table reflects the details of the issuance of 9,180,180 shares in respect of Conversion Notices received for a total of $100,000 in principal and $5,582 in accrued interest from CN#2 during the nine month period ended September 30, 2015:

Conversion Date
 
Original Principal Amount
($)
   
Accrued interest payable
($)
   
Conversion Price
($)
   
 
Number of shares issued
 
March 26, 2015
   
6,775
     
-
     
0.0115167
     
588,235
 
April 1, 2015
   
50,000
     
-
     
0.0115000
     
4,347,826
 
April 22, 2015
   
43,225
     
5,582
     
0.0115000
     
4,244,119
 
Total
   
100,000
     
5,582
             
9,180,180
 

As of September 30, 2015, the principal amount and all accrued interest payable with respect to CN#2 was paid in full with issuance of common stock.

(4)  
Convertible note due on January 13, 2016 (CN#3)

On January 13, 2015 the Company entered into a Securities Purchase Agreement (“SPA”) with Adar Bays, LLC (“Adar”) a Florida Limited Liability company where under the Company has issued two 8% convertible redeemable notes in the aggregate principal amount of $150,000 with the first note being $75,000 and the second note being $75,000, convertible into shares of the Company’s common stock with a maturity date one year after issuance or January 13, 2016.  The first of the two notes (the “First Note”) shall be paid for by Adar upon execution of the SPA, and the second note (the “Second Note”) shall initially be paid for by the issuance of an offsetting $75,000 secured note issued to the Company by Adar (“Buyer Note”), provided that prior to conversion of the Second Note, Adar must have paid off the Buyer Note in cash. Under the terms of the First Note, at any time after 180 days, the holder may elect to convert all or part of the face value of the note into shares of the Company’s common stock without restrictive legend at a price (“Conversion Price”) for each share of Common Stock equal to 52% of the lowest trading price of the Company’s common stock for the twelve prior trading days including the day upon which a Notice of Conversion is received by the Company.   If the shares are not delivered in 3 business days, to the holder, the Notice of Conversion may be rescinded. Under the terms of the Second Note, the holder is entitles at its option, after the expiration of the requisite Rule 144 holding period and after full cash payment for the promissory note issued by the holder to the Company simultaneously with the issuance by the Company of this note (the “Holder Issued Note”) to convert all or part of the Note then outstanding into shares of the Company’s common stock equal to 52% of the lowest trading price of the Company’s common stock for the twelve prior trading days including the day upon which a Notice of Conversion is received by the Company.   If the shares are not delivered in 3 business days, to the holder, the Notice of Conversion may be rescinded.  With respect to the First and Second Notes, in the


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5- Convertible Notes

(4)  
Convertible note due on January 13, 2016 (CN#3) (cont’d)
 
event that the Company experiences a DTC “Chill” on its shares the conversion price shall be decreased to 42% instead of 52% while the “Chill” is in effect, and in no event shall the holder be allowed to effect a conversion, if such conversion, along with other shares of the Company common stock beneficially owned by the holder and its affiliates would exceed 9.9% of the outstanding shares of the common stock of the Company.  Further, with respect to the Second note, in the event the Company is not “Current” in its SEC filings at the time the note is cash funded, the discount shall be decreased to 40% instead of 52%.  In respect of the First and Second notes interest on any unpaid principal balance of the Notes shall be paid by the Company in common stock (the “Interest Shares”).  The Holder may at any time send a Notice of Conversion for Interest Shares based on the aforementioned formula for all or part of interest payable.

During the first 180 days the Company may redeem the First Note by paying to the holder an amount as follows: (i) if the redemption is in the first 90 days the note is in effect an amount equal to 125% of the unpaid principal amount of the note along with accrued interest; (ii) if the redemption is after the 91st day the note is in effect then the
Company may redeem the note in an amount equal to 135% of unpaid principal and interest.  The note is not redeemable after 180 days.
 
The Second Note may not be prepaid, except that if the First Note is redeemed by the Company within 6 months of the issuance date of such note, the obligations of the Company under the Second Note will be automatically deemed satisfied and the Second Note and the Holder Note will be deemed canceled and of no further force or effect.
 
Upon funding of each Note the Company shall pay $3,750 in legal fees and fees to Carter, Terry & Company of $7,500.
 
On January 15, 2015 the Company received net proceeds from Adar totaling $63,750 with respect to the First Note in the total gross amount of $75,000.   Financing fees of $7,500 and legal fees of $3,750 were paid.

The following table reflects the issuance of 7,620,002 shares in respect of Conversion Notices received for a total of $52,000 in principal during the nine month period ended September 30, 2015:

Conversion Date
 
Original Principal Amount
($)
   
Accrued interest payable
($)
   
 
Conversion Price
($)
   
 
 
Number of shares issued
 
July 20, 2015
   
5,000
     
-
     
0.00936
     
534,188
 
July 23, 2015
   
15,000
     
-
     
0.00936
     
1,602,564
 
August 13, 2015
   
7,000
     
-
     
0.00832
     
841,346
 
August 27, 2015
   
8,000
     
-
     
0.005772
     
1,386,001
 
September 8, 2015
   
7,000
     
-
     
0.005252
     
1,332,826
 
September 16, 2015
   
10,000
     
-
     
0.0052
     
1,923,077
 
Total
   
52,000
     
-
             
7,620,002
 

As of September 30, 2015, the balance payable on CN #3 includes $23,000 in principal from convertible notes and $3,772 in accrued interest payable.



EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5- Convertible Notes

(5)  
Convertible note due on January 14, 2016 (CN#4)

On July 14, 2015, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds totaling $90,000 from total loan proceeds of $102,000, which bears interest at 8% per annum and is due on January 14, 2016. Financing fees of $10,000 and legal fees of $2,000 were paid in respect of the note.  Interest shall accrue from the advancement date and shall be payable on maturity. 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 a 45% discount to the lowest trading prices for the previous twenty (20) trading days to the date of conversion. As of September 30, 2015, the outstanding principal balance under this note was $102,000.

(6)  
Convertible note due on July 29, 2016 (CN#5)

On July 29, 2015 the Company entered into a convertible loan agreement with an investor. The Company received new proceeds totaling $75,000 from total loan proceeds of $84,000 which bears interest at 8% per annum and is due on July 29, 2016.  An original issue discount of $6,000 and legal fees of $3,000 were paid in respect of the note.  Interest shall accrue from the advancement date and shall be payable on maturity.  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 58% multiplied by the lowest intra-day trade price in the twenty (20) Trading Days immediately preceding the applicable Conversion, provided that if at any time the lowest intra-day trade price in the twenty (20) Trading Days immediately preceding any date of measurement is below $0.01, then in such event the then-current Conversion Factor shall be reduced by 5% for all future Conversions. As of September 30, 2015, the outstanding principal balance under this note was $84,000.

(7)  
Convertible note due on August 3, 2016 (CN#6)

On August 3, 2015, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds totaling $50,000 from total loan proceeds of $56,000, which bears interest at 8% per annum and is due on August 3, 2016. Financing fees of $3,500 and legal fees of $2,500 were paid in respect of the note. Interest shall accrue from the advancement date and shall be payable on maturity. 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 a 45% discount to the lowest trading prices for the previous twenty (20) trading days to the date of conversion. As of September 30, 2015, the outstanding principal balance under this note was $56,000.

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 11 for derivative disclosure)

Additionally, the Company evaluated the convertible notes in note 6 (1) above and concluded that these were 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. They were removed from the derivative liabilities upon their substantial modification and extinguishment. (See footnote 9 for derivative disclosure)




EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5- Convertible Notes

The carrying value of certain convertible notes (CN#1, CN#2 and CN#3) are as follows

   
CN#1
   
CN#2
   
CN#3
   
Total
 
Carrying value, December 31, 2013
 
$
-
   
$
-
   
$
-
   
$
-
 
Add: Face value of certain convertible notes
   
125,000
     
100,000
     
-
     
225,000
 
Less: unamortized discount
   
(79,860
)
   
(48,371
)
           
(128,231
)
Carrying value, December 31, 2014
   
45,140
     
51,629
     
  -
     
96,769
 
                                 
Add: Face value of certain convertible notes
   
125,000
     
-
     
75,000
     
200,000
 
                                 
Total Face value of certain convertible notes
   
250,000
     
100,000
     
75,000
     
425,000
 
Less: converted face value to shares
   
(250,000
)
   
(100,000
)
   
(52,000
)
   
(402,000
)
Less: unamortized discount
   
-
     
-
     
(11,052
)
   
(11,052
)
Carrying value, September 30, 2015
 
$
-
     
-
   
$
11,948
     
11,948
 

The carrying value of certain convertible notes (CN#4 CN#5 and CN#6) are as follows

   
CN#4
   
CN#5
   
CN#6
   
Total
 
Carrying value, December 31, 2014
 
 $
-
   
$
-
   
$
-
   
$
-
 
                                 
Add: Face value of certain convertible notes
   
102,000
     
84,000
     
56,000
     
242,000
 
                                 
Total Face value of certain convertible notes
   
102,000
     
84,000
     
56,000
     
242,000
 
Less: converted face value to shares
   
-
     
-
     
-
     
-
 
Less: unamortized discount
   
(58,443
)
   
(69,541
)
   
(47,126
)
   
(175,110
)
Carrying value, September 30, 2015
 
$
43,557
     
14,459
   
$
8,874
   
 $
66,890
 

Amortization of the discount over the nine months ended September 30, 2015 totaled $385,848, which amount has been recorded as interest expense.  The unamortized discount of $186,162 associated with above notes (CN #1 to CN#6) will be expensed in future periods.

EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
Note 6 – Common Stock and Stock-Based Compensation

Common stock

Shares issued in current period ended September 30, 2015:
 
Issuances Date
   
Conversion Price/FMV
($)
   
Number of shares
issued
   
Amount
($)
 
February 27, 2015
Conversion of debt
   
0.0364520
     
1,141,587
     
41,613
 
March 26, 2015
Conversion of debt
   
0.0115167
     
588,235
     
6,775
 
April 1, 2015
Conversion of debt
   
0.0115000
     
4,347,826
     
50,000
 
April 17, 2015
Conversion of debt
   
0.0239200
     
659,114
     
15,766
 
April 22, 2015
Conversion of debt
   
0.0115000
     
4,244,119
     
48,807
 
April 29, 2015
Conversion of debt
   
0.0208000
     
1,013,171
     
21,074
 
May 7, 2015
Conversion of debt
   
0.0130000
     
2,029,715
     
26,386
 
May 21, 2015
Conversion of debt
   
0.0130000
     
2,035,616
     
26,463
 
June 2, 2015
Conversion of debt
   
0.0141445
     
1,875,620
     
26,530
 
June 8, 2015
Conversion of debt
   
0.0141440
     
2,097,405
     
29,666
 
June 18, 2015
Services rendered
   
0.0330000
     
1,239,913
     
40,917
 
June 29, 2015
Conversion of debt
   
0.0145600
     
1,269,592
     
18,485
 
July 7, 2015
Conversion of debt
   
0.00936
     
2,088,197
     
19,546
 
July 20, 2015
Conversion of debt
   
0.00936
     
4,171,103
     
39,041
 
July 23, 2015
Conversion of debt
   
0.00936
     
1,602,564
     
15,000
 
August 13, 2015
Conversion of debt
   
0.00832
     
841,346
     
7,000
 
August 27, 2015
Conversion of debt
   
0.005772
     
1,386,001
     
8,000
 
September 8, 2015
Conversion of debt
   
0.005252
     
1,332,826
     
7,000
 
September 16, 2015
Conversion of debt
   
0.0052
     
1,923,077
     
10,000
 
Total
             
35,887,027
     
458,069
 



EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 6 – Common Stock and Stock-Based Compensation (continued)

Shares issued in the fiscal year ended December 31, 2014

On April 30, 2014, 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 $32,620.

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.

On October 17, 2014, the Company issued 3,500,000 shares of the Company’s common stock at $0.0213 per share with a fair value of $74,550 as stock awards to officers and directors of the Company.

As of September 30, 2015 and December 31, 2014, there were a total of 212,481,149 and 176,594,122 shares issued and outstanding, respectively.

Stock award and stock option

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 awarded Mr. Woywod, director of the Company, 500,000 common shares and Mr. Harney, director of the Company, 3,000,000 common shares, 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 from the date of grant, which options also vested immediately.

 
Stock Award

As a result of the stock awards granted, the Company recorded stock based compensation expenses totaling $74,550 as consulting fees during the year ended December 31, 2014.


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 6 – Common Stock and Stock-Based Compensation (continued)

Stock award and stock option (cont’d)

 
Stock Option

The following tables summarize the information concerning stock options outstanding as of September 30, 2015 and December 31, 2014:
 
   
September 30, 2015
   
December 31, 2014
 
 
Shares
 
Weighted Average Exercise Price
$
 
Shares
 
Weighted Average Exercise Price
$
 
Outstanding at beginning of the year
500,000
   
 0.03
 
-
   
-
 
   Granted
-
   
-
 
500,000
   
0.03
 
   Exercised
-
   
-
 
-
   
-
 
   Expired or cancelled
-
   
-
 
-
   
-
 
Outstanding at the period
500,000
   
0.03
 
500,000
   
0.03
 

Exercise Price
   
Number Outstanding
   
Weighted Average Remaining Contractual Life
 
Number Subject to Exercise
 
$
0.03
     
500,000
     
1.05
 
500,000
 

The Company recognized stock-based compensation of $9,832 as consulting fees during the year ended December 31, 2014 in respect of the aforementioned stock option.

Valuation Assumptions

The following table presents the range of the weighted average fair value of options granted and the related assumptions used in the Black-Scholes model for stock option grants made during the year ended December 31, 2014:
   
Options Granted
   
October 17, 2014
Fair value of options granted
 
$
0.021
 
Assumptions used:
       
Expected life (years) (a)
   
2
 
Risk free interest rate (b)
   
0.39
%
Volatility (c)
   
261
%
Dividend yield (d)
   
0.00
%

 
a)
Expected life: The expected term of options granted is determined using the “shortcut” method allowed by SAB No.107. Under this approach, the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term. 
 
b)
Risk-free interest rate: The rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected life of the options.
 
c)
Volatility: The expected volatility of the Company’s common stock is calculated by using the historical daily volatility of the Company’s stock price calculated over a period of time representative of the expected life of the options. 
 
d)
Dividend yield: The dividend yield rate is not considered in the model, as the Company has not established a dividend policy for the stock.


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 6 – Common Stock and Stock-Based Compensation (continued)

Share Purchase Warrants

During the year ended December 31, 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 September 30, 2015 and December 31, 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/Expired
   
-
     
-
 
Exercised
   
-
     
-
 
Outstanding – December 31, 2014
   
950,000
     
0.14
 
Forfeited/Canceled/Expired
   
616,667
     
0.05
 
Exercised
   
-
     
-
 
Outstanding – September 30, 2015
   
333,333
     
0.3
 
Exercisable – September 30, 2015
   
333,333
     
0.26
 

The intrinsic value of these warrants was $0 and $19,833 at September 30, 2015 and December 31, 2014.

Note 7 - Derivative Liabilities

(1)  
Derivative liabilities from convertible notes

On August 22, 2014, the Company entered into a convertible loan agreement with an investor (the “CN#1”) see below 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.

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.  During the period ended June 30, 2015 the Company further received a total of $125,000 in respect to the backend note from CN#1. 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.


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 7 - Derivative Liabilities (continued)

On January 13, 2015, the Company entered into a convertible loan agreements with an investor (the “CN#3”). The Company received a total of $75,000 which bears interest at 8% per annum and is due on January 13, 2016. 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 July 14, 2015, the Company entered into a convertible loan agreement with an investor (the “CN#4”). The Company received net proceeds totaling $90,000 from total loan proceeds of $102,000, which bears interest at 8% per annum and is due on January 14, 2016. Financing fees of $10,000 and legal fees of $2,000 were paid in respect of the note.  Interest shall accrue from the advancement date and shall be payable on maturity. 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 a 45% discount to the lowest trading prices for the previous twenty (20) trading days to the date of conversion.
 
 
On July 29, 2015 the Company entered into a convertible loan agreement with an investor (the “CN#5”). The Company received cash proceeds of $75,000 from total loan proceeds of $84,000 which bears interest at 8% per annum and is due on July 29, 2016.  An original issue discount of $6,000 and legal fees of $3,000 were paid in respect of the note.  Interest shall accrue from the advancement date and shall be payable on maturity.  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 58% multiplied by the lowest intra-day trade price in the twenty (20) Trading Days immediately preceding the applicable Conversion, provided that if at any time the lowest intra-day trade price in the twenty (20) Trading Days immediately preceding any date of measurement is below $0.01, then in such event the then-current Conversion Factor shall be reduced by 5% for all future Conversions.

On August 3, 2015, the Company entered into a convertible loan agreement with an investor (the “CN#6). The Company received net proceeds totaling $50,000 from total loan proceeds of $56,000, which bears interest at 8% per annum and is due on August 3, 2016. Financing fees of $3,500 and legal fees of $2,500 were paid in respect of the note. Interest shall accrue from the advancement date and shall be payable on maturity. 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 a 45% discount to the lowest trading prices for the previous twenty (20) trading days to the date of conversion.

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 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 derivate instruments.
 
(2)  
Derivative liabilities from share purchase warrants

On August 22, 2014, the Company entered into a convertible loan agreement with an investor (the “CN#1”) see above (2) which the Company concluded that these are tainted due to the variable conversion rate of the share purchase warrants (ref Note 10) and as such they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities. 


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 7 - Derivative Liabilities (continued)

As a result of the application of ASC No. 815 in period ended September 30, 2015 the fair value of the conversion feature is summarized as follows:

Balance at December 31, 2013
 
  $
23,790
 
Derivative addition associated with convertible notes
   
225,000
 
Recognition of derivative associated with tainted instruments
   
669,741
 
December 31, 2014 loss on change in fair value
   
1,332,898
 
Balance at December 31, 2014
   
2,251,429
 
Derivative additions associated with convertible notes
   
442,000
 
Extinguishment of derivative liabilities
   
(591,496
)
Derivative liability reclassified as additional paid-in capital associated with conversion of debt
   
(1,133,681
)
Loss on change in fair value during the period
   
(483,519
)
Balance at September 30, 2015
 
  $
484,733
 

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, 2015 and commitment date:

   
Commitment
Date
   
December 31,
2014
 
September 30,
2015
 
Expected dividends
   
0
     
0
 
0
 
Expected volatility
 
196.14 ~ 219.26
  %
 
192.59
%
219.13
%
Expect term
 
0.59 ~ 1 years
   
0.29~0.64 years
 
0.55~0.66
 
Risk free interest rate
 
0.10~0.19
 %
   
0.12
%
0.11
%

Note 8 - Commitments

(1)  
Agency Agreement with Cater, Terry & Company

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. 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.

EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 8 – Commitments (continued)

(1)  
Agency Agreement with Cater, Terry & Company (cont’d)

On August 8, 2014, the Company issued 500,000 shares of the Company’s common stock in consideration of $15,000 as financing costs pursuant the Agreement.

On August 22, 2014 and September 17, 2014 the Company raised $125,000 and $100,000, respectively, under two convertible notes (CN#1 and CN#2) and paid to C&T cash consideration of $22,500 as financing costs and issued 307,482 shares of the Company’s common stock in consideration of $9,000 as financing costs.

During the nine month ended September 30, 2015 the Company raised $125,000 and $75,000, respectively, under two convertible notes (CN#1 and CN#3) and paid to C&T cash consideration of $20,000 as deferred financing costs.

During the nine month ended September 30, 2015 the Company raised $102,000 and $56,000, respectively, under two convertible notes (CN#4 and CN#6) and paid to C&T cash consideration of $13,500 as deferred financing costs.

(2)  
Independent Contractor Agreement with Sherf Corporation

On January 15, 2015, the Company entered into an Independent Contractor Agreement (the “Agreement”) with Scherf Corporation (“Scherf”) of Las Vegas, Nevada for the provision of public relations services to the Company for an initial term of one year, expiring on December 31, 2015, with an option to renew for successive one (1) year terms upon mutual agreement of both parties.

Under the terms of the Agreement Scherf will provide communications with shareholders, drafting and placing press announcements and articles pertaining to the Company’s business and introduction to venture capital firms, hedge funds and other potential investors. In consideration for services provided, exclusive of venture capital introduction) Scherf shall receive compensation equal to 0.5% of the increase in the market cap of the Company from one fiscal quarter to the next.  The compensation shall be paid in the form of common shares of the Company determined by the average closing price of the Company’s common stock over the last ten trading days of the fiscal quarter to be compensated for. Such compensation shall be paid within fifteen (15) days of the close of each fiscal quarter.  Further the Company shall compensate Scherf for all venture capital introduction ate a rate of 3% of any and all funds received as investments by any venture capital, hedge fund or other investor introduced by Scherf. The compensation shall be paid in the form of common shares of the Company determined by the average closing price of the Company’s common stock over the last ten trading days of the fiscal quarter to be compensated for. Such compensation shall be paid within fifteen (15) days of the close of each fiscal quarter.

Further by resolution of the Board it was determined that Scherf shall receive additional compensation in the form of 1,000,000 restricted shares of the Company’s common stock as consideration for the translation of the Company’s website, and mobile application into German.  On June 18, 2015, 1,039,913 restricted shares were issued in respect of the translation services provided and the quarterly compensation for the period ended March 31, 2015 as required under the terms of the agreement.  During the period ended June 30, 2015 the contract with Scherf was terminated by mutual agreement of the parties thereto.


EPOXY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 8 – Commitments (continued)

(3)  
Service Agreement with Wheat Creative LLC

On February 1, 2015 the Company entered into a Services Agreement (the “Agreement”) with Wheat Creative LLC (the “Consultant”), a Nevada Limited Liability Company.   Under the terms of the Agreement, the Consultant shall be engaged to redesign the Company’s mobile app for both iOS and Android.  As consideration for services rendered, the Consultant shall receive a total of 200,000 shares of the Company’s restricted common shares, deliverable upon completion and delivery of the redesign of the Company’s mobile app for both iOS and Android. On June 18, 2015, 200,000 shares were issued upon completion of services rendered as compensation.

(4)  
Office Lease

On March 16, 2015 the Company entered into a six month lease commencing April 1, 2015 with certain other third parties in respect of a shared office and residential premises located in San Diego, California.   The Company’s obligation under the terms of the lease is a total of $875 per month plus utilities.  The Company paid a security deposit of $875 and the first month’s rent totaling $1,750 upon signing of the contract.

Note 9 – Related Party Transactions

On August 28, 2014, the Company entered into an employment agreement with David Gasparine, president of the Company, for management services. The employment agreement became effective as of September 1, 2014. Under the employment agreement, the base salary is of $36,000 per annum, paid monthly. The amount of base salary shall be determined by the Board of Directors and may be increased, but not decreased, from time to time by the Board of Directors of the Company. In addition to the base salary, Mr. Gasparine shall be eligible for periodic bonuses in amounts to be determined by the Board of Directors.  In January 2015 the board agreed to increase Mr. Gasparine’s salary to $57,600 per year, with a further salary increase to $72,000 per annum effective October 1, 2015.

During the nine month period ended September 30, 2015, the Company paid $43,200 to Mr. Gasparine (September 30, 2014 - $31,286).
 
Note 10 – Subsequent events

On October 6, 2015, the Board of Directors authorized the issuance of 1,000,000 Class B preferred shares to David Gasparine, the CEO, for services rendered to the corporation.  The shares which will be issued to David Gasparine Corporation are not registered under the Securities Act. These shares will be issued relying upon the exemption from the registration requirements provided under Sections 4(a) or 3(b) of the Securities Act.

On October 13, 2015 the Company received conversion notices from an investor requesting the conversion of a total of $12,000 in principal by way of issuance of a total of 2,307,692 shares of common stock.
 


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 d o 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, 2014, as filed with the Securities and Exchange Commission on April 15, 2015, along with the accompanying notes.  As used in this quarterly report, the terms "we", "us", "our", and the "Company" means Epoxy, Inc. 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., 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

Three and Nine Months Ended September 30, 2015 Compared to the Three and Nine Months Ended September 30 30, 2014.

Our net loss for the three and nine month periods ended September 30, 2015 and 2014 is as follows:

   
Three month ended
   
Nine months ended
 
   
September 30,
   
September 30,
 
   
2015
   
2014
   
2015
   
2014
 
                         
Revenue
 
$
9,370
   
$
10,632
   
$
25,015
   
$
18,366
 
                                 
Operating Expenses
                               
Depreciation
   
2,831
     
-
     
8,492
     
-
 
Professional fees
   
13,393
     
16,559
     
31,074
     
27,964
 
Software development expenses
   
35,207
     
9,960
     
82,352
     
14,176
 
Consulting fee
   
26,513
     
29,741
     
65,998
     
22,955
 
General and administrative expenses
   
35,154
     
18,662
     
188,649
     
18,592
 
Total operating expenses
   
113,098
     
51,693
     
376,565
     
83,687
 
Loss from operations
   
(103,728
)
   
(48,344
)
   
(351,550
)
   
(75,953
)
                                 
Other Income (Expenses):
                               
Gain (loss) on change in fair value of derivative liabilities
   
162,548
     
198,268
     
483,519
     
181,541
 
Gain (loss) on debt extinguishment
   
512,393
     
(120,804
)
   
512,393
     
(120,804
)
Interest expenses
   
(162,802
)
   
(88,371
)
   
(481,991
)
   
(112,478
)
Total other income (expenses)
   
512,139
     
(10,907
)
   
513,921
     
(51,741
)
                                 
Net income (loss)
 
$
408,411
   
$
(75,197
)
 
$
162,371
   
$
(191,984
)

During the comparative three and nine month periods ended September 30, 2015 and 2014 the Company experienced a substantive increase to consulting fees, software development costs and general and administrative expenses as we expanded our sales force, updated and improved our application software and website, and increased customer identification and cultivation plans, including increased marketing and advertising efforts, all of which activities required more time from our key management and consultants. 
 
Liquidity and Financial Condition

Working Capital
   
At
September 30,
2015
   
At
December 31,
2014
 
Current Assets
 
$
169,821
   
$
64,833
 
Current Liabilities
 
$
833,235
   
$
2,492,709
 
Working Capital (Deficit)
 
$
(663,414
)
 
$
(2,427,876
)
 
Cash Flows
   
Nine Month Periods Ended September 30,
 
   
2015
   
2014
 
Net cash used in operating activities
 
$
(306,106
)
 
$
(171,229
)
Net cash provided by financing activities
 
$
385,000
   
$
273,000
 
Net increase (decrease) in cash during period
 
$
78,894
   
$
101,771
 
Operating Activities
 
Net cash used in operating activities was $306,106 for the nine month period ended September 30, 2015 compared with cash used in operating activities of $171,229 in the same period in 2014. 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 month period ended September 30, 2015 and 2014.
 
Financing Activities
 
Net cash provided by financing activities was $385,000 for the nine month period ended September 30, 2015 compared to $273,000 of cash provided in the same period in 2014.

Going Concern
 
We believe that presently we have sufficient funds to operate for the coming 12 months. While our cash on hand presently falls short of our currently anticipated operating expenses, we believe any shortfall can be addressed by the anticipated increase to our 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 revenues of $25,015 and $18,366 in the nine month periods ended September 30, 2015 and 2014, respectively, 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, 2015, we had a working capital deficit of $663,414 and have an accumulated deficit of $2,070,592. 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 $125,000, including costs for advertising and marketing, as required with respect the operations of wholly-owned subsidiary, Couponz, Inc., including salaries, advertising and marketing, 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

On September 25, 2015, the FASB issued Accounting Standards Update, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not been issued. This amendment will not have a material impact on our financial statements. 

The Company has reviewed all other 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 13, 2015 the Company received conversion notices from an investor requesting the conversion of a total of $7,000 in principal by way of issuance of a total of 841,346 shares of common stock.
 
On August 27, 2015 the Company received conversion notices from an investor requesting the conversion of a total of $8,000 in princpial by way of issuance of a total of 1,386,001 shares of common stock.
 
On September 8, 2015 the Company received conversion notices from an investor requesting the conversion of a total of $7,000 in principal by way of issuance of a total of 1,332,826 shares of common stock.
 
On September 16, 2015 the Company received conversion notices from an investor requesting the conversion of a total of 10,000 in principal by way of issuance of a total of 1,923,077 shares of common stock.
 
On October 6, 2015, the Board of Directors authorized the issuance of 1,000,000 Class B preferred shares to David Gasparine, the CEO, for services rendered to the corporation.  The shares which will be issued to David Gasparine Corporation are not registered under the Securities Act. These shares will be issued relying upon the exemption from the registration requirements provided under Sections 4(a) or 3(b) of the Securities Act.

On October 13, 2015 the Company received conversion notices from an investor requesting the conversion of a total of $12,000 in principal by way of issuance of a total of 2,307,692 shares of common stock.
 
In respect of the aforementioned shares issued to an investor the Company will claim an exemption from the registration requirements of the Securities Act of 1933, as amended, for the issuance of the 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.

Other than as disclosed above, there were no unregistered securities to report which were sold or issued by the Company without the registration of these securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements, within the period covered by this report, which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

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

 
 
9

 
ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable
 
ITEM 5. OTHER INFORMATION

On August 10, 2015, the Board of Directors approved that Class B Preferred stock shall be designated as 15,000,000 shares with par value of $0.00001 with voting rights of 1,000 to 1 compared to common, but no conversion rights.

On October 1, 2015 the Board of Directors approved a salary increase for the Company’s President and Director to $72,000 per annum.

On October 6, 2015, the Board of Directors authorized the issuance of 1,000,000 Class B preferred shares to David Gasparine, the CEO, for services rendered to the corporation.  The shares which will be issued to David Gasparine Corporation are not registered under the Securities Act. These shares will be issued relying upon the exemption from the registration requirements provided under Sections 4(a) or 3(b) of the Securities Act.


ITEM 6. EXHIBITS

Exhibit Description
Filed herewith
Form
Exhibit
Incorporated by reference
Filing Date
 
Articles of Incorporation
 
S-1
3.1
03/18/08
 
Certificate of Designation
 
8-K
3.1
10/15/2015
 
By-laws as currently in effect
 
S-1
3.2
03/18/08
 
Agency Agreement with Carter, Terry & Company executed August 8, 2014
 
 10-Q
   10.1
08/14/2014
 
Form of Addendum between the Company and certain investors with convertible loans expiring November 27, 2015
 
 10-Q
   10.2
    11/19/2014
 
August 22, 2014 letter agreement between the Company and Quarry Bay Equity Inc.
 
 10-Q
   10.3
11/19/2014
 
Form of employment agreement between the Company and David Gasparine
 
 10-Q
   10.4
11/19/2014
 
2014 Stock Option and Award Plan
 
 10-Q
   10.5
11/19/2014
 
Form of Stock Option Agreement
 
 10-Q
   10.6
11/19/2014
 
Form of Stock Award Agreement
 
 10-Q
   10.7
11/19/2014
 
Form of Note - LG Capital Funding LLC 
 
 10-Q
   10.8
11/19/2014
 
Form of Note - JSJ Investments Inc.
 
 10-Q
   10.9
11/19/2014
 
Form of SPA and 8% Convertible Redeemable Notes entered into between the Company and Adar Bays LLC.
 
8-K
   10.1
02/17/2015
 
Form of Independent Contractor Agreement between the Company and Scherf Corporation
 
8-K
   10.2
02/17/2015
 
Form of Services Agreement between the Company and Wheat Creative LLC
 
8-K
   10.3
02/17/2015
 
Form of SPA and 8% Convertible Note - JSJ Investments Inc.
 
  10-Q 
  10.10
08/19/2015
 
Form of SPA and 8% Convertible Note – St. George Investments LLC
 
10-Q
  10.11
08/19/2015
 
Form of SPA and 8% Convertible Note – GW Holdings Group LLC
 
10-Q
  10.12
08/19/2015
 
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
X
 
   31.1
   
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
X
 
   31.2
   
Certification of Principal Executive and Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act
 X 
 
   32.1
   
Interactive Data files
X
 
  101
   




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.
 
       
Date: November 16, 2015
By:
/s/ David Gasparine
 
 
Name:
David Gasparine
 
 
Title:
Chief Executive Officer (Principal Executive Officer), Treasurer, (Principal Financial Officer) Secretary, and Director