UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: June 30, 2014

 

¨ TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT OF 1934

 

For the transition period from ___________ to _____________

 

Commission file number 333-158584

EHOUSE GLOBAL, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada		90-1066766
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
9974 Scripps Ranch Road, #182 San Diego, CA		92131
(Address of Principal Executive Offices)		(Zip Code)

 

	858-459-0770
	(Issuer's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 filer.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

 

Large accelerated filer   ¨	.	Accelerated filer	¨
Non-accelerated filer   ¨	(Do not check if a smaller reporting company)	Smaller reporting company	x

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) (check one):
Yes   ¨   . No   x .

 

The number of shares of the Registrant’s Common Stock outstanding as of August 18, 2014 was 269,547,513, all of one class, $.001 par value per share  

  

  

EHOUSE GLOBAL, INC.

  

Table of Contents

  

PART I-- FINANCIAL INFORMATION

 

		Page
Item 1.	Financial Statements	F-2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Control and Procedures	15

 

PART II-- OTHER INFORMATION

 

Item 1	Legal Proceedings	16
Item 1A	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	17

 

 

  

EHOUSE GLOBAL, INC.

FINANCIAL STATEMENTS

TABLE OF CONTENTS

 

Contents	Page
Balance Sheets as June 30, 2014 and December 31, 2013	F-2
Statements of Operations for the three and six months ended June 30, 2014, 2014 and 2013	F-3
Statement of Stockholders’ Equity for the Period from December 31,2013 to June 30, 2014	F-4
Statements of Cash Flows for the six months ended June 30, 2014 and 2013	F-5
Notes to the Financial Statements	F-6

  

 

ITEM 1. Financial Information

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Balance Sheets

( unaudited )

 

		June 30,				December 31,
		2014				2013
ASSETS
Current assets:
Cash		$	100,292			$	14,779
Funds Receivable			25,000
Prepaid expenses			5,664				5,664
Debt offering costs			9,714				3,122
Total current assets			140,670				23,565
Furniture and Equipment			1,033				-
Total assets		$	141,703			$	23,565
LIABILITIES
Current liabilities :
Accounts payable & accrued expenses		$	24,323			$	30,600
Notes Payable						$	100,000
Notes payable - related party			75,000				75,000
Convertible Debt, Net of debt discount of $ 327,658 and $ 46,399 respectively			232,678				6,601
Derivative Liabilities			515,195				89,372
Total current liabilities			847,196				301,573
STOCKHOLDERS' DEFICIT
Stockholders' Deficit:
Preferred Stock:  $0.001 par value, 1,000,000 shares
authorized, 500,000 and 0 shares issued and outstanding			500				-
Common stock: $0.001 par value, 2,500,000,000 shares
authorized; 246,372,528 and 99,800,000 shares issued and outstanding at June 30, 2014 and December 31, 2013			246,373				99,800
Additional paid- in capital			814,637				20,000
Accumulated deficit			(1,767,003	)			(397,808	)
Total Stockholders' deficit			(705,493	)			(278,008	)
Total liabilities and stockholders' deficit		$	141,703			$	23,565

 

The accompanying notes are an integral part of these Financial Statements

 

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Statement of Operations

(unaudited)

 

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2014				2013				2014				2013
Operating expenses:
General and administrative expenses		$	209,144			$	125			$	635,176			$	3,639
Other expenses ( income)			(1,620	)			(11,632	)			(1,620	)			(11,632	)
Total operating expenses			207,524				(11,507	)			633,556				(7,993	)
Other (Income) Expense
Interest expense			223,104								310,747				-
Derivative interest expense			116,736								1,095,904				-
Change in fair value of embedded derivative liabilities			(739,830	)							(671,012	)			-
Total other (Income) expense			(399,990	)							735,639				-
Net Income ( Loss) before taxes			192,466				11,507				(1,369,195	)			7,993
Income taxes			-				-				-				-
Net Income ( Loss )		$	192,466			$	11,507			$	(1,369,195	)		$	7,993
Net Income ( Loss) per common share :
basic		$	0.00			$	0.00			$	-0.01			$	0.00
diluted		$	0.00			$	0.00			$	-0.01			$	0.00
Weighted average number
of common shares outstanding: Basic			187,032,012				98,800,000				152,844,420				98,800,000
of common shares outstanding: Diluted			649,387,287				98,800,000				615,199,695				98,800,000

 

* Gives retroactive effect to 34 for 1 forward stock split declared in January, 2013

 

The accompanying notes are an integral part of these Financial Statements

 

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Statement of Stockholders Equity - Worksheet

(Unaudited)

  

		Preferred								Common								Additional Paid-in				Accumulated
		Shares				Amount				Shares				Amount				Capital				(Deficit)				Total
Balances,  December 31, 2013			-				-				99,800,000			$	99,800			$	20,000			$	(397,808	)		$	(278,008	)
Preferred Stock Issued for services			500,000				500				-				-				190,631				0				191,131
Common stock issued for services ($0.12/share)											500,000				500				62,000								62,500
Reclassification of derivative liability  associated with convertible debt																			517,459								517,459
Convertible debt and accrued interest  converted into common stock											146,072,528				146,073				24,547								170,620
Net Loss																							(1,369,195	)			(1,369,195	)
Balances,  June 30, 2014			500,000			$	500				246,372,528			$	246,373			$	814,637			$	(1,767,003	)		$	(705,493	)

  

  

EHOUSE GLOBAL, INC.

dba Nutraliquids

Statements of Cash Flows

For the Six Months Ended June 30, 2014 and 2013

(Unaudited)

 

		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income  ( loss )			(1,369,195	)		$	7,993
Settlement of Debt			-				(11,632	)
Adjustments to reconcile Net  (Loss) to Net Cash
used in operating activities :
Common stock issued for services			62,500				-
Preferred stock issued for services			191,131				-
Depreciation expense			147				-
Amortization of debt offering costs and discount			293,245				-
Derivative interest expense			1,095,904				-
Change in fair value of derivative liabilities			(671,012	)			-
Change in operating assets and liabilities
Prepaid expenses			-				-
Accounts payable and accrued expenses			(6,277	)			2,293
Net Cash Used in Operating Activities			(403,557	)			(1,346	)
CASH FROM INVESTING ACTIVITIES
Purchase of Equipment			(1,180	)			-
Net cash provided by investing activities			(1,180	)			-
CASH FROM FINANCING ACTIVITIES -
Direct offering costs paid			(12,750	)			-
Issuance of Convertible Notes Payable			503,000				-
Net Cash Provided by Financing Activities		$	490,250				-
CHANGE IN CASH		$	85,513				(1,346	)
CASH AT BEGINNING OF PERIOD			14,779				1,606
CASH AT END OF PERIOD		$	100,292			$	260
Supplementary disclosure of non-cash financing activity:
Non-cash additions to convertible note balance			37,336				-
Reclassification of derivative liability to additional paid-in-capital			517,459				-
Note payable reclassified to convertible debt			100,000				-
Shares issued in conversion of convertible debt and accrued interest			170,620				-
Debt discount on convertible note accounted for as a derivative liability			519,682				-
Supplementary disclosure of cash flow information
Cash paid during the period for:
Interest			-				-
Income taxes			-				-

 

See accompanying notes to Financial Statements.

 

 

  

EHOUSE GLOBAL, INC.

dba Nutraliquids

Notes to Financial Statements

(Unaudited)

 

NOTE 1 - ACCOUNTING POLICIES AND BASIS OF PRESENTATION

 

Ehouse Global, Inc. (the “Company”) prepared these financial statements in accordance with both accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Therefore, the financial statements do not include all disclosures required by generally accepted accounting principles. However, the Company has recorded all transactions and adjustments necessary to present fairly the financial statements included in this Form 10-Q. The adjustments made are normal and recurring. The following notes describe only the material changes in accounting policies, account details or financial statement notes during the first three months of 2014. Therefore, please read these financial statements and notes to the financial statements together with the audited financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2013. The income statement for the six months ended June 30, 2014 cannot necessarily be used to project results for the full year.

 

NOTE 2 - BUSINESS OPERATIONS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information.  Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

 

It is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statements presentation.  The results for the interim period are not necessarily indicative of the results to be expected for the year.

 

Impact of New Accounting Standards

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates.

 

Furniture and Equipment

 

Furniture and equipment are stated at cost, less accumulated depreciation.  Expenditures for maintenance and repairs are charged to expense as incurred.  Depreciation is provided using the straight-line method over the estimated useful life of three to five years.

 

Derivative Liabilities

 

We value derivative liabilities using a multinomial lattice model. The model is based on a probability weighted discounted cash flow model of future projections of various outcomes. Some of the key assumptions include the likelihood of future financing, stock price volatility, and discount rates.

 

Net Income (Loss) Per Common Share

 

Basic Net income (loss) per common share is computed pursuant to FASB ASC 260-10-45. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period.

 

 

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Notes to Financial Statements

(Unaudited)

 

The computation of diluted earnings per share at June 30, 2014 includes the common stock equivalents of the following potentially dilutive securities:

 

		June 30, 2014
Convertible Debt  (Exercise price - $0.00168 - $0.0007/share)			462,355,275

 

Subsequent Events

 

The Company follows the guidance in FASB ASC 855-10-50 for the disclosure of subsequent events. The Company evaluates subsequent events from the date of the balance sheet through the date when the financial statements are issued or available to be issued.

 

NOTE 3 - GOING CONCERN

 

The accompanying financial statements have been prepared assuming that we will continue as a going concern. As reflected in the accompanying financial statements, we have very limited financial resources, with working capital and net shareholder deficits and had generated no revenue through June 30, 2014.

 

We have actively developed and plan to introduce sixteen different liquid nutritional products into the market. While we are undertaking our business plan to generate additional revenues, our cash position may not be sufficient to support our basic business plan and product distribution efforts. Management believes that the actions presently underway to introduce our products to the marketplace have a realistic chance of succeeding. While we believe in the viability of our strategy to increase revenues and in our ability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to achieve profitable operations or obtain adequate financing.

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 4 - Fair Value of Financial Instruments

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable and accrued expenses, approximate their fair values because of the current nature of these instruments. Debt approximates fair value based on interest rates available for similar financial arrangements. Derivative liabilities which have been bifurcated from host convertible debt agreements are presented at fair value.

 

The following is the major category of liabilities measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

 

						June 30, 2014				December 31, 2013
Derivative Liabilities			Level 3			$	515,195			$	89,372

 

 

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Notes to Financial Statements

(Unaudited)

 

NOTE 5 - PROPERTY AND EQUIPMENT

 

At June 30, 2014, property and equipment consisted of office furniture purchased during the six months ended June 30, 2014 for $1,180 with an estimated useful life of 3 years.

 

Depreciation expense for the six months ended June 30, 2014 totaled $147.

 

NOTE 6 - NOTE PAYABLE

 

On June 30, 2013, the Company entered into a senior loan agreement with Realty Capital Management Limited (the “Note”) for a loan of $100,000. The loan, which becomes due 365 days after cash proceeds are received by the Company, bears interest at 12% per annum with interest payable in four quarterly payments commencing 90 days after cash proceeds from the loan is received by the Company. The Company received the proceeds from the loan on July 11, 2013.

 

The Note is senior to all other notes or obligations that the Company may enter into in the future before the Note is repaid. It also places limits on the number of common shares or instruments convertible into common shares that the Company may issue.

 

The Company also agreed to issue 1,000,000 newly-issued shares of its common stock to the lender. These shares have piggyback registration rights. These shares were issued on July 26, 2013 at which time there were 99,800,000 shares of common stock outstanding. The Company capitalized the $1,000 as debt issue costs at the time of issuance of these shares which will be amortized over the life of the debt. The valuation for this issuance was based on the par value of the shares issued or $0.001 per share. At the time of issuance, the Company had a stockholders’ deficit, no shares had been purchased for cash and there was no market in the shares.

 

The President of the Company has pledged 42,900,000 shares of his common stock of the Company as collateral for the loan. In the event of an Event of Default that is not remedied as defined in the Loan Agreement, the lender would also have the right to convert the principal balance of the loan into common shares of the Company at the rate of $0.001 per share (for up to 100 million shares).

 

If an Event of Default occurs and the lender converts the Note, the lender will have a controlling interest in the Company.

 

On January 31, 2014, the debt holder entered into a securities settlement agreement whereby the note was transferred over to a third party. In connection with the transfer, an additional $5,000 of principal was recorded which was treated as debt issue costs, interest was changed to a guaranteed 10% and a conversion clause was added. The conversion price equals 25% of the lowest traded price during the 20 trading days prior to the conversion.

 

The Company identified conversion features embedded within this convertible debt. The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability and recorded a derivative liability and derivative expense of $518,396 on the day of the amendment - See note 5.

 

During the six months ended June 30, 2014, the Company entered into the following conversion agreements in connection with this note agreement to pay the principal and accrued interest in full:

 

		Principal/Interest				Shares				Conversion
Date		Converted				Issued				Price
January 31, 2014			12,450				4,980,020				0.0025
February 11, 2014			10,457				5,228,555				0.0020
February 19, 2014			7,521				5,489,425				0.0014
February 26, 2014			8,289				6,050,000				0.0014
March 4, 2014			7,953				6,362,400				0.0013
March 11, 2014			7,700				6,695,400				0.0012
March 20, 2014			7,046				7,045,950				0.0010
March 27, 2014			6,457				7,421,840				0.0009
April 2, 2014			6,795				7,810,710				0.0009
April 22, 2014			7,151				8,219,950				0.0009
April 28, 2014			9,083				8,650,637				0.0010
May 9, 2014			9,559				9,103,800				0.0011
May 20, 2014			8,144				9,580,800				0.0009
May 23, 2014			6,896				11,033,040				0.0006

 

As of June 30, 2014 and December 31, 2013, the convertible note balance and accrued interest totals $0 and $106,152, respectively.

 

 

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Notes to Financial Statements

(Unaudited)

 

NOTE 7 - CONVERTIBLE DEBT

 

On November 27, 2013, the Company entered into an agreement whereby the Company will issue up to $53,000 in a convertible note. The note matures on August 27, 2014 and bears an interest rate of 8%. The conversion price equals the “Variable Conversion Price”, which is 58% of the “Market Price”, which is the average the three lowest closing bid prices for the common stock during the fifteen (15) trading day period prior to the conversion. The holder converted the principal balance of the note and most of the accrued interest to common shares during the second quarter of 2014. The Company received $50,000 proceeds, less debt issue costs of $3,000. As of June 30, 2014 and December 31, 2013, the convertible note balance and accrued interest is $307 and $53,388, respectively.

 

During the six months ended June 30, 2014, the Company entered into the following conversion agreements in connection with this note agreement to pay the principal and accrued interest:

 

		Principal/Interest				Shares				Conversion
Date		Converted				Issued				Price
June 19, 2014			15,000				11,538,462				0.0013
June 20, 2014			12,900				9,923,077				0.0013
June 24, 2014			14,980				11,523,077				0.0013
June 26, 2014			10,120				9,415, 385				0.0011

 

 

On January 28, 2014, the Company entered into an agreement whereby the Company will issue up to $78,500 in a convertible note. The note matures on October 30, 2014 and bears an interest rate of 8%. The conversion price equals the “Variable Conversion Price”, which is 58% of the “Market Price”, which is the average the three lowest closing bid prices for the common stock during the fifteen (15) trading day period prior to the conversion. The Company received $75,000 proceeds, less debt issue costs of $3,500 on February 11, 2014. As of June 30, 2014, the convertible note balance and accrued interest is $81,168.

 

On January 30, 2014, the Company entered into an agreement whereby the Company will issue up to $335,000 in a convertible note subject to a $35,000 original issue discount (OID).  The note matures on January 30, 2016, and bears an interest rate of 0% if note is repaid on or before 90 days from the effective date. If the note is not repaid within 90 days, a one-time interest charge of 12% will be applied to the principal.  The conversion price equals the lesser of $0.012 or the “Variable Conversion Price”, which is 60% of the “Market Price”, which is lowest trading prices for the common stock during the twenty-five (25) trading day period prior to the conversion. The Company received $75,000 proceeds through June 30, 2014.

 

On January 31, 2014, the Company entered into an agreement whereby the Company will issue up to $100,000 in a convertible note. The note matures on July 31, 2014 and bears an interest rate of 10%. The conversion price equals the “Variable Conversion Price”, which is 25% of the “Market Price”, which is the lowest closing bid price for the common stock during the twenty (20) trading day period prior to the conversion. The Company received $50,000 proceeds on January 31, 2014 and the remaining $50,000 on February 14, 2014. As of June 30, 2014, the convertible note balance and accrued interest is $104,160.

 

On March 17, 2014, the Company entered into an agreement whereby the Company will issue up to $45,000 in a convertible note. The note matures on March 17, 2015 and bears an interest rate of 8%. The conversion price equals the “Variable Conversion Price”, which is 55% of the “Market Price”, which is the lowest closing bid price for the common stock during the fifteen (15) trading day period prior to the conversion. The Company received $42,750 proceeds, less debt issue costs of $2,250 on March 26, 2014. As of June 30, 2014, the convertible note balance and accrued interest is $46,036.

 

On April 7, 2014, the Company entered into an agreement whereby the Company will issue up to $ 112,000 in a convertible note. The note matures on October 7, 2014 and bears interest at an annual 12%. The conversion price equals 50% of the market price, which is the lowest trading price over the previous 20 trading days.

 

On April 8, 2014 the Company entered into an agreement whereby the Company will issue up to $ 53,000 in a convertible note. The note bears interest of 8% per year. The conversion price equals 58% of the market price, which is the average of the three lowest trading price over the previous 15 trading days. The company received $ 32,500 on April 30, 2014.

 

On April 11, 2014, the Company entered into an agreement whereby the Company will issue up to $57,836 in a convertible note. The note matures on 4/11/16 and bears interest at an annual rate of 12%. The conversion price equals 60% of the market price, which is the lowest trading price over the previous 25 trading days or $0.012.

 

On May 21, 2014, the Company entered into an agreement whereby the Company will issue up to $26,500 in a convertible note. The note matures on 5/21/15, and bears interest at an annual rate of 8%. The conversion price equals 55% of the market price, which is the lowest bid over the previous 15 trading days.

 

On May 23, 2014, the Company entered into an agreement whereby the Company will issue up to $37,500 in a convertible note. The note matures on 11/3/14, and bears interest at an annual rate of 0% The conversion price equals 58% of the market price, which is the average of the three lowest trading prices over the previous 15 trading days.

 

On June 27, 2014, the Company entered into an agreement whereby the Company will issue up to $25,000 in a convertible note. The note bears interest of 8% per year. The Company received $22,500 on June 27, 2014. The conversion price equals 58% of the market price, which is the average of the three lowest trading prices over the previous 15 trading days.

 

 

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Notes to Financial Statements

(Unaudited)

 

Debt Issue Costs

 

During the six months ended June 30, 2014 and year ended December 31, 2013, the Company paid debt issue costs totaling $10,750 and $4,000, which includes non-cash additions of $5,000 during the six months ended June 30, 2014 and fees paid through the issuance of common stock in the amount of $1,000 during the year ended December 31, 2013, respectively.

 

The following is a summary of the Company’s debt issue costs:

 

		Six months ended				Year ended
		June 30, 2014				December 31, 2013
Debt issue costs			21,750				4,000
Accumulated amortization of debt issue costs			(12,036	)			(878	)
Debt issue costs - net			9,714				3,122

 

Debt Discount

 

During the six months June 30, 2014 and the year ended December 31, 2013, the Company recorded debt discounts totaling $605,018 and $53,000, respectively.

 

The debt discount recorded pertains to convertible debt that contains embedded conversion options that are required to bifurcated and reported at fair value and original issue discounts.

 

The Company amortized $263,161 and $0 during the six months ended June 30, 2014 and 2013, respectively, to amortization of debt discount expense and relieved $14,199 during the six months ended June 30, 2014 due to conversions.

 

		As of				As of
		June 30, 2014				December 31, 2013
Debt discount			605,018				53,000
Accumulated amortization of debt discount			(263,161	)			(6,601	)
Elimination of debt discount due to conversion			(14,199	)
Debt discount - net			327,658				46,399

 

Derivative Liabilities

 

The Company identified conversion features embedded within this convertible debt. The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability.

 

 

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Notes to Financial Statements

(Unaudited)

 

As a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follow:

 

Derivative liability - December 31, 2012			-
Fair value at the commitment date for convertible instruments			144,346
Change in fair value of embedded derivative liability			(54,974	)
Derivative liability - December 31, 2013			89,372
Fair value at the commitment date for convertible notes issued during 2014			1,614,294
Reclassification of derivative liability associated with convertible debt that ceased being a derivative liability to additional paid in capital			(517,459	)
Fair value mark to market adjustment for convertible debt			(671,012	)
Derivative liability - June 30, 2014			515,195

 

The Company recorded the debt discount to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross proceeds of the note. The Company recorded a derivative interest expense for the six months ended June 30, 2014 and 2013 of 1,095,904 and $0, respectively.

 

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 June 30, 2014:

 

Assumption	Commitment Date	June 30, 2014
Expected dividends:	0%	0%
Expected volatility:	192% - 415%	247%
Expected term (years):	0.5 - 2 years	0.12 - 1.75 years
Risk free interest rate:	0.1% - .13%	0.07% - 0.13%

 

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 December 31, 2013:

 

Assumption	Commitment Date	December 31, 2013
Expected dividends:	0%	0%
Expected volatility:	391%	371%
Expected term (years):	0.75	0.65
Risk free interest rate:	0.13%	0.13%

 

NOTE 8 - DEBT - RELATED PARTY

 

The Company’s President has made loans of $75,000 to the Company. The loans are interest-free and due on demand.

As of June 30, 2014 and December 31, 2013, the balance of the note is $75,000.

 

NOTE 9 - STOCKHOLDERS’ EQUITY

 

Common Stock

 

The share exchange agreement between NutraLiquids, Inc. as the accounting acquirer and Ehouse as the legal acquirer effective April 30, 2013 resulted in the retroactive recognition of the common stock issuance of Ehouse on inception of business of the accounting on December 14, 2010.

 

 

 

EHOUSE GLOBAL, INC.

dba Nutraliquids

Notes to Financial Statements

(Unaudited)

 

On May 3, 2012, the company received a $20,000 contribution to capital from an existing shareholder for no additional shares.

 

On July 19, 2013, the Company issued 1,000,000 shares of common stock in connection with an agreement with a finance corporation to actively seek additional financing for the company. As there was no active trading market for the company’s shares, the share issuance was reflected at par value of $1,000.

 

On March 19, 2014, the Company filed an amendment to the Company’s articles of incorporation with the Secretary of State of the State of Nevada, to increase the Company’s authorized common stock from two hundred fifty million (250,000,000) shares of common stock, par value $0.001 per share, to seven hundred fifty million (750,000,000) shares of common stock, par value $0.001 per share.

 

On March 19, 2014, the Company entered into a consulting agreement for the consultant to provide the Company general consulting services which could include financing introductions, business development opportunities and general marketing activities. In connection with this agreement, during the three months ended March 31, 2014, the Company issued 500,000 common shares valued at $62,500. The fair value of the stock issuance was based upon the quoted closing trading price on the date of issuance.

 

On June 25, 2014, the Company filed an amendment to the company's Articles of Incorporation with the Secretary of State of Nevada, to increase the Company's authorized common stock from seven hundred fifty million ( 750,000,000 )shares of common stock, par value $ 0.001, to two billion five hundred million ( 2,500,000,000) shares of common stock, par value $ 0.001 per share.

 

During the first six months of 2014, the Company issued common stock for conversions of debt and accrued interest as noted earlier. The total number of shares issued during the first six months of 2014 totaled 146,072,528 in exchange for $170,620 in convertible debt and accrued interest.

 

Series A Preferred Stock

 

In 2013, the Company determined that it was in their best interests to file a Certificate of Designation that authorized the issuance of up to one million (1,000,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series A Preferred Stock”.

 

Each holder of outstanding shares of Series A Preferred Stock shall be entitled to five hundred (500) votes for each share of Series A Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company; no liquidation value and no rights or dividends.

 

On March 18, 2014, the Company issued an aggregate of 500,000 shares of Series A Preferred Stock to the Company’s President, Chief Executive Officer, Secretary and Treasurer, in consideration for services rendered to the Company, including for and as incentive to continue to assist and provide services to the Company.

 

Based upon the voting control obtained, the Company recorded stock based compensation of $191,131.

 

NOTE 10 - SUBSEQUENT EVENTS

 

The Company has evaluated all events that occurred after the balance sheet date of June 30, 2014 through August 19, 2014, the date that these financial statements were available to be issued.

 

On July 3, 2014 the company received $ 37,500 from a Note at 8% per year having an Original Issue Discount of $ 12,500.

 

On July 31, 2014 Common Stock was issued for 11,291,685 shares in exchange for Notes. On August 5, 2014 11,883,300 common shares were issued in exchange for Notes.

 

 

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

 

Note Regarding Forward-Looking Statements

 

Except for the historical information contained herein, the matters addressed in this Item 2 constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed below under the heading "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those anticipated by the Company's management. The Private Securities Litigation Reform Act of 1995 (the "Act") provides certain "safe harbor" provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the Act. The Company undertakes no obligation to publicly release the results of any revisions to its forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events.  The Company cautions readers that important factors may affect the Company’s actual results and could cause such results to differ materially from forward-looking statements made by or on behalf of the Company.  These factors include the Company’s lack of historically profitable operations, dependence on key personnel, the success of the Company’s business, ability to manage anticipated growth and other factors identified in the Company's filings with the Securities and Exchange Commission, press releases and/or other public communications. Unless the context otherwise requires, the words “Ehouse,” the "Company," "we," "us" and "our" refer to Ehouse Global, Inc.

 

Reverse Merger and Spinoff

 

Effective June 30, 2013, Ehouse entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among (i) Ehouse (ii) NutraLiquids, LLC and (iii) the shareholders of NutraLiquids, pursuant to which the holders of 100% of the outstanding units of NutraLiquids transferred to Ehouse all of the units of NutraLiquids in exchange for the issuance of 52,000,000 shares (the “Shares”) of Ehouse common stock (the “Share Exchange”). As a result of the Share Exchange, NutraLiquids became a wholly-owned subsidiary of Ehouse.

 

Effective June 30, 2013, Ehouse entered into a Spinoff Agreement with Scott Corlett, its former President and largest shareholder, under which Ehouse assigned and transferred to Mr. Corlett all of Ehouse’s rights, title and interest in and to the operating assets specifically associated with its packaging business in exchange for which Mr. Corlett agreed to assume the operating liabilities specifically associated with the packaging business as defined in the Agreement and return 198,000,000 shares of Ehouse’s common stock owned by him.

 

As a result of the Spinoff Agreement, Ehouse ceased to be a company engaged in the commercial packaging market. Ehouse’s operations are now conducted through NutraLiquids and primarily consist of development of and plan to sell liquid nutritional beverages.

 

The merger was accounted for as a reverse acquisition and recapitalization. NutraLiquids is the acquirer for accounting purposes, and Ehouse is the issuer. Accordingly, NutraLiquids' historical financial statements for periods prior to the acquisition become those of the acquirer retroactively restated for the equivalent number of shares issued in the merger. Reported operations prior to the merger are those of NutraLiquids. No Ehouse operating results from prior to the merger date are included in reported financial statements of operations. Earnings per share for the period prior to the merger are restated to reflect the equivalent number of shares outstanding.

 

Operations

 

NutraLiquids is a development stage business that commenced formal operations on November 16, 2010. Prior to commencing formal operations, its President, Scott Corlett, and some colleagues incurred costs of approximately $500,000 to develop the idea of creating a comprehensive line of natural liquid dietary aids and nutritional supplements which could be packaged and sold in single serving pouches. These costs were incurred prior to the commencement of the formal operations and are not included in any of the Company’s financial statements.

 

Since commencing formal operations, the Company has continued developing the product line, developed marketing approaches and has located entities to manufacture products and packaging and distribute finished products. While no written agreements have been executed, the Company is confident that it has the operational structure in place.

 

 

From a marketing perspective, we will emphasize large supermarket and other convenience store chains and will also sell product on the Internet. The emphasis since developing the product line has been to obtain sources of debt and/or equity financing to enable the production and distribution of our products as well as undertaking a formal marketing program. We are actively seeking such funds but cannot provide a likely forecast as to the timing or success of our efforts. We will commence production and distribution as soon as funds are available to us.

 

Results of Operations

 

For the six months ended June 30, 2014 and June 30, 2013

 

A summary of our operations for the six months ended June 30, 2014 and 2013 follows:

 

		2014				2013
Revenue		$	-			$	-
Operating Expenses			633,556				7,993
Other (Income) Expense			735,639				-
Net Income/(Loss)		$	(1,369,195	)		$	7,993

 

Other Income (Expense) for the six months ended June 30, 2014 consists of the following:

 

Interest Expense		$	(310,747	)
Derivative Interest Expenses			(1,095,904	)
Change in fair value of embedded derivative liabilities			671,012
Total		$	(735,639	)

  

Revenues

 

For the six months ended June 30, 2014 and June 30, 2013 the Company generated $0 in revenue.

 

Operating Expenses

 

Total operating expenses for the six months ended June 30, 2014 and June 30, 2013 were $635,556 and $7,993, respectively, representing an increase of $625,563. This increase in total operating expenses is mostly attributable to Shares issued for services.

 

Other Expenses

 

Other expenses for the six months ended June 30, 2014 and June 30, 2013 were 735,639 and $0, respectively. For the six months ended June 30, 2014, the other expenses were due to derivative interest expense of ($1,095,904), interest expenses of ($310,747), and changes in derivative liabilities of $671,012.

 

Net Loss

 

Net loss for the six months ended June 30, 2014 and June 30, 2013 were ($1,369,195) and $7,993 respectively. The increase in net loss is mostly attributable to the increase in operating expenses and derivative expenses.

 

Liquidity

 

The Company has 100,292 of cash on hand as of June 30, 2014. We currently have very limited cash to continue operations for 12 months.

 

We intend to rely upon the issuance of common stock and loans and advances from shareholders to fund administrative expenses pending acquisition of an operating company. However, our shareholders are under no obligation to provide such funding, and there can be no assurance, however, that any of the contemplated financing arrangements described herein will be available and, if available, can be obtained on terms favorable to the Company

 

As discussed above, the Company had a net loss of ($1,369,195) for the six months ended June 30, 2014. The Company also had a stockholder's deficiency of (1,224,621) and a working capital deficiency of ($705,493) as of June 30, 2014 and cash used in operations for the six month period ended June 30, 2014 was ($403,557).

 

 

Off Balance Sheet Arrangements

 

We do not have any transactions, arrangements and other relationships with unconsolidated entities that will affect our liquidity or capital resources. We have no special purpose entities that provide off-balance sheet financing, liquidity or market or credit risk support, nor do we engage in swap agreements, or outsourcing of research and development services, that could expose us to liability that is not reflected on the face of our financial statements.

  

Recently Issued Accounting Pronouncements

 

There were no new accounting pronouncements that had or are expected to have a significant impact on the Company’s operating results or financial position.

 

Critical Accounting Policies

 

The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

 

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

 

Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements.  There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made.  Note 2 to the financial statements included in the Company’s Annual Report on Form 10K includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.  

 

ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

ITEM 4  CONTROLS AND PROCEDURES

 

Disclosure controls and procedures are controls and other procedures that are designed to provide reasonable assurances that information required to be disclosed by the Company in its periodic reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurances that information required to be disclosed by the Company in its periodic reports that are filed under the Exchange Act is accumulated and communicated to our Principal Executive Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Evaluation of disclosure controls and procedures.

 

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of management including our Principal Executive Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on the evaluation, the Company's Principal Executive Officer has concluded that the Company's disclosure controls and procedures are designed to provide reasonable assurances that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and are operating in an effective manner.

 

Changes in internal controls over financial reporting.

 

There were no changes in the Company's internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this quarterly report.

 

 

PART II: OTHER INFORMATION

 

ITEM 1 - LEGAL PROCEEDINGS

 

No legal proceedings were initiated by or served upon the Company in the three-month period ended June 30, 2014.

 

From time to time the Company may be named in claims arising in the ordinary course of business.  Currently, no legal proceedings or claims, other than those disclosed above, are pending against or involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on its business and financial condition.

 

ITEM 1A - RISK FACTORS

 

Not required of smaller reporting companies.

 

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

 

On April 7, 2014, the Company entered into an agreement with an accredited investor  whereby the Company will issue up to $112,000 in a convertible note. The note matures on October 7, 2014 and bears interest at an annual 12%. The conversion price equals 50% of the market price, which is the lowest trading price over the previous 20 trading days.

 

On April 8, 2014 the Company entered into an agreement with an accredited investor whereby the Company will issue up to $53,000 in a convertible note. The note bears interest of 8% per year. The conversion price equals 58% of the market price, which is the average of the three lowest trading price over the previous 15 trading days. The company received $ 32,500 on April 30, 2014.

 

On April 11, 2014, the Company entered into an agreement with an accredited investor whereby the Company will issue up to $57,836 in a convertible note. The note matures on April 11, 2016 and bears interest at an annual rate of 12%. The conversion price equals 60% of the market price, which is the lowest trading price over the previous 25 trading days or $0.012.

 

On May 21, 2014, the Company entered into an agreement with an accredited investor whereby the Company will issue up to $26,500 in a convertible note. The note matures on May 21, 2015, and bears interest at an annual rate of 8%. The conversion price equals 55% of the market price, which is the lowest bid over the previous 15 trading days.

 

On May 23, 2014, the Company entered into an agreement with an accredited investor whereby the Company will issue up to $37,500 in a convertible note. The note matures on November 3, 2014, and bears interest at an annual rate of 0%.  The conversion price equals 58% of the market price, which is the average of the three lowest trading prices over the previous 15 trading days.

 

On June 27, 2014, the Company entered into an agreement with an accredited investor whereby the Company will issue up to $25,000 in a convertible note. The note bears interest of 8% per year. The Company received $22,500 on June 27, 2014. The conversion price equals 58% of the market price, which is the average of the three lowest trading prices over the previous 15 trading days.

 

On July 3, 2014 the Company entered into an agreement with an accredited investor whereby the company will issue up to $ 37,500 in a convertible note at 8% per year. The company received $25,000 cash.

 

All shares were issued in reliance upon Section 4(2) of the Securities Act of 1933. No underwriters were used in any of the above-referenced sales.

 

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4 -  MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5 - OTHER INFORMATION

 

None.

 

 

ITEM 6 - EXHIBITS

 

Exhibit Number		Description
31.1		Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.1NS

XBRL Instance Document

 

101.SCH

XBRL Taxonomy Extension Schema Document

 

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

 

101.DEF

XBRL Taxonomy Extension Definitions Linkbase Document

 

 

 

Signature

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	Ehouse Global, Inc.
	(Registrant)
	/s/ Scott Corlett
	Scott Corlett
	Title: President and Chief Financial Officer
	August 19, 2014