UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the quarterly period ended September 30, 2014
   
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from __________ to __________

000-53669
Commission File Number
 
EPOXY, INC.
(Exact name of registrant as specified in its charter)
   
Nevada
N/A
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
500N. Rainbow Blvd. Suite 300, Las Vegas, Nevada
89107
(Address of principal executive offices)
(Zip Code)
 
702-350-2449
(Registrant’s  telephone number, including area code)
 
NEOHYDRO TECHNOLOGIES CORP
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 
Yes [X]  No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 
Yes [  ]  No [ X ]

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

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

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

 
Yes [  ]  No [X ]
 
 
 

 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

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

 
Yes [  ]  No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

176,594,122 shares of common stock outstanding as of November 19, 2014
(Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.)

 

 
2

 

EPOXY, INC.
TABLE OF CONTENTS

   
Page
 
PART I – FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements
  4
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  5
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
  10
     
Item 4.
Controls and Procedures
  10
     
 
PART II – OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
  11
     
Item 1A.
Risk Factors
  11
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  11
     
Item 3.
Defaults Upon Senior Securities
  11
     
Item 4.
Mine Safety Disclosures
  11
     
Item 5.
Other Information
  12
     
Item 6.
Exhibits
  13
     
 
SIGNATURES
  14

 

 
3

 

EPOXY, INC.
(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

PART I -- FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS

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


 
4

 

EPOXY, INC.
(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)
CONSOLIDATED BALANCE SHEETS
(Unaudited)

   
September 30,
2014
   
December 31,
2013
 
 ASSETS
           
Current
           
Cash
 
$
132,238
   
$
30,467
 
Accounts receivable
   
880
     
2,330
 
Total Current Assets
   
133,118
     
32,797
 
                 
Trademark and Patent, net
   
7,695
     
7,695
 
                 
Total Assets
 
$
140,813
   
$
40,492
 
                 
LIABILITIES
               
Current
               
Accounts payable and accrued liabilities
   
75,252
     
64,401
 
Loan payable
   
32,000
     
63,573
 
Convertible notes, net of unamortized discount
   
27,833
     
-
 
Derivative liabilities
   
790,961
     
23,790
 
Total Current Liabilities
   
926,046
     
151,764
 
                 
Convertible notes, net of unamortized discount
   
2,329
     
19,190
 
                 
Total Liabilities
   
928,375
     
170,954
 
                 
STOCKHOLDERS’ DEFICIT
               
Preferred Stock, $0.00001 par value;
               
authorized: 35,000,000 Series A Preferred shares, 25,080,985 issued and outstanding as of September 30, 2014 and December 31, 2013
   
251
     
251
 
authorized: 15,000,000 Series B Preferred shares, no shares issued and outstanding as of September 30, 2014 and December 31, 2013
   
-
     
-
 
Common Stock, $0.00001 par value;
               
authorized: 480,000,000 shares, 173,094,122 and 168,824,707 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively
   
1,731
     
1,688
 
Additional Paid-in Capital
   
(312,470)
     
152,689
 
Accumulated deficit
   
(477,074)
     
(285,090)
 
Total Stockholders’ Deficit
   
(787,562)
     
(130,462)
 
Total Liabilities and Stockholders’ Deficit
 
$
140,813
   
$
40,492
 

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


 
F-1

 

EPOXY, INC.
(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
   
Three month ended
   
Nine months ended
 
   
September 30,
   
September 30,
 
   
2014
   
2013
   
2014
   
2013
 
                         
Revenue
 
$
10,632
   
$
6,600
   
$
18,366
   
$
11,800
 
                                 
Operating Expenses
                               
Professional fees
   
16,559
     
-
     
44,523
     
6,972
 
Software development expenses
   
9,960
     
13,327
     
24,136
     
32,307
 
Consulting fee
   
29,741
     
12
     
52,696
     
10,460
 
Financing costs
   
54,750
     
-
     
54,750
     
-
 
General and administrative expenses
   
18,662
     
2,128
     
37,254
     
28,262
 
Total operating expenses
   
129,672
     
15,467
     
213,359
     
78,001
 
Loss from operations
   
(119,040
)
   
(8,867
)
   
(194,993
)
   
(66,201
)
                                 
Other Income (Expenses):
                               
Gain (Loss) on change in fair value of derivative liabilities
   
198,268
     
-
     
181,541
     
-
 
Loss on extinguishment of debt
   
(88,185)
     
-
     
(88,185)
     
-
 
Loss on debt settlement
   
(32,619
)
   
-
     
(32,619
)
   
-
 
Interest expenses
   
(6,006
)
   
-
     
(15,441
)
   
-
 
Accretion of discount on convertible notes
   
(27,615
)
   
-
     
(42,287
)
   
-
 
Total other expenses
   
43,843
     
-
     
3,009
     
-
 
                                 
Net loss
 
$
(75,197)
     
(8,867
)
 
$
(191,984)
   
$
(66,201
)
                                 
Net loss per share – basic and diluted
 
$
(0.00
)
   
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
                                 
Weighted average shares outstanding – basic and diluted
   
171,206,155
     
24,514,319
     
169,835,793
     
24,514,319
 

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


 
F-2

 

EPOXY, INC.
(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Nine Months ended
 
   
September 30,
 
   
2014
   
2013
 
Cash flows from Operating Activities
           
Net loss
 
$
(191,984)
   
$
(66,201)
 
Adjustments to reconcile net loss to net cash used in operations:
               
Shares issued for financing costs
   
24,000
     
-
 
Loss on extinguishment of debt
   
88,185
     
-
 
Loss on debt settlement
   
32,619
     
-
 
(Gain)/loss on change in fair value of derivative liabilities
   
(181,541)
     
  -
 
Accretion of discounts on convertible notes
   
42,287
     
-
 
Imputed interest
   
3,905
     
-
 
Foreign exchange in loan payable
   
(1,001)
     
  -
 
Changes in operating assets and liabilities:
               
Accounts receivables
   
1,450
     
(1,500)
 
Accounts payable
   
10,851
     
(13,499)
 
Net cash used in operating activities
   
(171,229)
     
(81,200)
 
                 
Cash flows from Financing Activities
               
Proceeds from sale of common stock
   
28,000
     
  -
 
Proceeds from convertible notes
   
225,000
         
Proceeds from loan payable
   
20,000
     
81,532
 
Net cash provided by financing activities
   
273,000
     
81,532
 
                 
Increase (decrease) in cash during the period
   
101,771
     
332
 
Cash, beginning of period
   
30,467
     
492
 
Cash, end of period
 
$
132,238
   
$
824
 
                 
Supplemental disclosure of cash flow information:
               
Cash paid for:
               
    Interest
 
$
2,986
   
$
-
 
    Income taxes
 
$
-
   
$
-
 
                 
Non-Cash Transactions
               
Shares and warrants reclassified as derivative liability
 
$
40,517
   
$
 -
 
Debt discount on convertible debt due to beneficial conversion feature
   
125,000
     
-
 
Debt discount due to derivative
   
219,500
     
-
 
Derivative liability due to tainting of amended convertible notes
   
769,729
     
-
 
Shares issued for the settlement of debt
   
83,192
     
-
 

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


 
F-3

 

EPOXY, INC.
(FORMERLY NEOHYDRO TECHNOLOGIES CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 – Description of business and basis of presentation

Organization and nature of business

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

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

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

Financial Statements Presented

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

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

Note 2 – Going Concern
 
At September 30, 2014 and 2013, the Company had net losses of $191,984 and $66,201, respectively. The Company believes that its existing capital resources may not be adequate to enable it to execute its business plan. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The Company estimates that it will require additional cash resources during 2014 based on its current operating plan and condition. The Company expects cash flows from operating activities to improve, primarily as a result of an increase in revenue and a decrease in certain operating expenses, although there can be no assurance thereof. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.
 
Note 3 – Correction of an error

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

 
F-4

 
 
Note 3 – Correction of an error (continued)
 
The following table reflects the amounts originally reported and as adjusted for each major caption of the balance sheet:

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

Note 4- Fair Value Measurements

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

Level 1 – Quoted prices in active markets for identical assets or liabilities.
 
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

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

The following table provides a summary of the fair value of our derivative liabilities as of September 30, 2014 and December 31, 2013:
   
Fair value measurements on a recurring basis
 
   
Level 1
   
Level 2
   
Level 3
 
As of September 30, 2014:
                       
Liabilities
                       
Embedded derivative
 
$
-
   
$
-
   
$
790,961
 
                         
As of December 31, 2013:
                       
Liabilities
                       
Embedded derivative
 
$
-
   
$
-
   
$
23,790
 
 
 
 
F-5

 
Note 5- Loans Payable

During the month of July 2014 the Company entered into 5% one-year promissory notes for a total of $20,000 with arm’s length third parties.
 
 
At September 30, 2014, the Company is indebted to related third parties for $20,000 (December 31, 2013 - $nil).

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

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

Note 6- Convertible Notes

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

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

On August 1, 2014 the Company successfully amended the terms of certain convertible loan agreements with four (4) investors for a total of $125,000 due and payable on November 27, 2015 (ref: Note 6).  Under the amended terms, a total of $125,000 originally available for conversion into a total of 250,000,000 shares of common stock at $0.0005 per share has been amended to reflect a price of $0.005 per share for a total of 25,000,000 shares of common stock, if converted. The Company determined that the amended qualified as a substantial modification under ASC 470-60.

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

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

 
F-6

 
 
Note 6- Convertible Notes (continued)
 
The carrying value of certain convertible notes is as follows:
   
December 31, 2013
   
August 1, 2014
   
August 1, 2014
Recalculation
   
September 30, 2014
 
Face value of certain convertible notes
  $ 125,000     $ 125,000     $ 125,000     $ 125,000  
Less: unamortized discount
    (105,810 )     (88,183 )     (125,000 )     (122,671 )
Carrying value
  $ 19,190       36,817     $ -     $ 2,329  

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

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

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

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

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

Additionally, the Company evaluated the convertible notes in note 6 (1) above and concluded that these are tainted due to the variable conversion rate of the above the convertible notes and as such they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities. (See footnote 9 for derivative disclosure)
 
   
Commitment Date
   
September 30, 2014
   
Expected dividends
   
0
     
0
   
Expected volatility
 
218.59 ~ 219.26
  %
 
215.76
%
 
Expect term
 
0.59 ~ 1 years
   
0.54~0.89 years
   
Risk free interest rate
 
0.10
 %
   
0.03 ~ 0.11
%
 

Amortization of the discount over the three month and nine month  period ended September 30, 2014 were $25,170 and $25,170 (September 30, 2013 - $nil), which amount has been recorded as interest expense and is reflected on the Company’s balance sheet as Convertible Note Liabilities, Net.  The unamortized discount of $194,330 associated with CN#1 and CN#2 will be expensed in future periods.
 
 
F-7

 
Note 7 – Common stock

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

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

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

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

Note 8 - Share Purchase Warrants

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

As September 30, 2014, the following share purchase warrants were outstanding:
 
   
Warrants
   
Weighted Average Exercise Price
 
Outstanding - December 31, 2013
   
856,667
     
0.12
 
Granted
   
93,333
     
0.30
 
Forfeited/Canceled
   
-
     
-
 
Exercised
   
-
     
-
 
Outstanding – September 30, 2014
   
950,000
     
0.14
 
Exercisable – September 30, 2014
   
950,000
     
0.14
 

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

 
F-8

 
Note 9- Derivative Liabilities

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

As of June 30, 2014, accordingly, given the fact that the Company currently has 480,000,000 shares of common stock authorized, the Company could exceed its authorized shares of common stock by approximately 4,743,836 shares (December 31, 2013 – 3,717,169 shares) if all of the financial instruments described in the table above were exercised or converted into shares of common stock. At June 30, 2014, 4,743,836 of these shares were in excess of the authorized shares and were accounted for as a derivative liability. The fair value of these 4,743,836 common shares was determined to be $51,708 ($23,790 as to 3,717,168 shares as of December 31, 2013) using the closing price of Epoxy’s common stock.
 
On August 1, 2014 the Company successfully amended the terms of certain convertible loan agreements with four (4) investors for a total of $125,000 due and payable on November 27, 2015 (ref: Note 6).  Under the amended terms, a total of $125,000 originally available for conversion into a total of 250,000,000 shares of common stock at $0.0005 per share has been amended to reflect a price of $0.005 per share for a total of 25,000,000 shares of common stock, if converted. As such a total of $40,517 was reclassified from derivative liability to additional paid in capital. On August 22, 2014, the Company entered into a convertible loan agreement with an investor (the “CN#1”) see below (1) which the Company concluded that these are tainted due to the variable conversion rate of the below convertible notes and as such they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities.

(2)  
Derivative liabilities from convertible notes
 
On August 22, 2014, the Company entered into a convertible loan agreements with an investor (the “CN#1”). The Company received a total of $125,000 which bears interest at 8% per annum and is due on August 22, 2015. Interest shall accrue from the advancement date and shall be payable on August 22, 2015. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price equal to 52% of the lowest trading price of the Common Stock as reported on the OTCQB exchange for the twelve (12) prior trading days including the day upon which a Notice of Conversion is received by the Company.

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

Since equity classification is not available for the conversion feature, we were required to bifurcate the embedded conversion feature and carry it as a derivative liability, at fair value. Derivative financial instruments are carried initially and subsequently at their fair values.
 
We estimated the fair value of the compound derivative on the inception dates, and subsequently, using the Black-Scholes Merton valuation technique, adjusted for the effect of dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, and risk free rates) that are necessary to fair value complex compound derivate instruments.

 
F-9

 
Note 9- Derivative Liabilities (continued)
 
As a result of the application of ASC No. 815 in period ended September 30, 2014 and issue dates of August 22, 2014 and September 17, 2014; the fair value of the conversion feature is summarized as follows:

Balance at December 31, 2013
          23,790
Debt discount
        219,500
Derivative addition due to the tainting of convertible notes
        769,729
Reclass of derivative to additional paid in capital
        (40,517)
September 30, 2014 gain on change in fair value
      (181,541)
Balance at September 30, 2014
        790,961
 
The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of September 30, 2014 and commitment date (August 22, 2014 and September 17, 2014): 

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

Note 10 - Commitments

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

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

 
F-10

 
 
Note 10 - Commitments (continued)
 
On August 8, 2014 the Company entered into an Agency Agreement (the “Agreement”) with Carter, Terry & Company (“C&T”) where under C&T will act as the Company’s exclusive Financial Advisor, Investment Bank and Placement Agent, on a "best efforts" basis for an initial period of 30 days, and then reverting to a non-exclusive financial advisor for the next twelve consecutive (12) months.  Under the terms of the Agreement, C&T will receive 500,000, fully paid for and earned restricted shares of the Company’s common stock, which shares were issued subsequent to September 30, 2014. In addition, in respect of any introductions those results in financing for the Company C&T shall receive fees as follows:

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

And;
       
 
an amount of restricted shares equal to 4% of capital raised divided by the closing price of the stock on the date of close.
 
On August 22, 2014 and September 17, 2014 the Company raised $125,000 and $100,000, respectively, under two convertible notes and paid to C&T cash consideration of $22,500 as financing costs and issued 307,482 shares of the Company’s common stock subsequent to September 30, 2014 in consideration of $9,000 as financing costs.
 
Note 11 – Subsequent events

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

 
F-11

 

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

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

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

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

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

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

Current Business

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

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

 
5

 
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.
 

 
6

 

RESULTS OF OPERATIONS

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

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

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

   
Three month ended
 
   
September 30,
 
   
2014
   
2013
 
             
Revenue
 
$
10,632
   
$
6,600
 
                 
Operating Expenses
               
Professional fees
   
16,559
     
-
 
Software development expenses
   
9,960
     
13,327
 
Consulting fee
   
29,741
     
12
 
Financing costs
   
54,750
     
-
 
General and administrative expenses
   
18,662
     
2,128
 
Total operating expenses
   
129,672
     
15,467
 
Loss from operations
   
(119,040
)
   
(8,867
)
                 
Other Income (Expenses):
               
Gain on change in fair value of derivative liabilities
   
198,268
     
-
 
Loss on extinguishment of debt
   
(88,185)
     
-
 
Loss on debt settlement
   
(32,619
)
   
-
 
Interest expenses
   
(6,006
)
   
-
 
Accretion of discount on convertible notes
   
(27,615
)
   
-
 
Total other expenses
   
43,843
     
-
 
                 
Net loss
 
$
(75,197
)
   
(8,867
)
 
During the comparative three month periods ended September 30, 2014 and 2013 the Company reported revenues of $10,632 and $6,600 respectively.  The Company experienced an increase to professional fees and consulting fees during the most recent three months ended September 30, 2014 as we expanded our customer identification and cultivation plans to include increased marketing and advertising efforts, requiring more time from our key management and consultants.  
 

 
7

 

Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013.
 
Our net loss for the nine month periods ended September 30, 2014 and September 30, 2013 is as follows:

   
Nine months ended
 
   
September 30,
 
   
2014
   
2013
 
             
Revenue
 
$
18,366
   
$
11,800
 
                 
Operating Expenses
               
Professional fees
   
44,523
     
6,972
 
Software development expenses
   
24,136
     
32,307
 
Consulting fee
   
52,696
     
10,460
 
Financing costs
   
54,750
     
-
 
General and administrative expenses
   
37,254
     
28,262
 
Total operating expenses
   
213,359
     
78,001
 
Loss from operations
   
(194,993
)
   
(66,201
)
                 
Other Income (Expenses):
               
Gain on change in fair value of derivative liabilities
   
181,541
     
-
 
Loss on extinguishment of debt
   
(88,185)
     
-
 
Loss on debt settlement
   
(32,619
)
   
-
 
Interest expenses
   
(15,441
)
   
-
 
Accretion of discount on convertible notes
   
(42,287
)
   
-
 
Total other expenses
   
3,009
     
-
 
                 
Net loss
 
$
(191,984
)
 
$
(66,201
)
 
During the comparative nine month periods ended September 30, 2014 and 2013 the Company reported revenues of $18,366 and $11,800 respectively.  The Company experienced a substantial increase to professional fees and consulting fees during the most recent nine months ended September 30, 2014 as we expanded our customer identification and cultivation plans to include increased marketing and advertising efforts, requiring more time from our key management and consultants.  We also undertook a name change to better reflect our current business operation. In addition, we experienced a decrease period over period in software development expenses as our application platform is now fully developed and requires only updates and maintenance.  
 
Liquidity and Financial Condition

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

 
8

 

Cash Flows
 
Cash Flows
       
   
Nine Month Periods Ended
   
September 30,
 2014
   
September 30,
 2013
Net cash used in operating activities
 
$
(171,229
)
 
$
(81,200
)
Net cash provided by financing activities
 
$
273,000
   
$
81,532
 
Net increase (decrease) in cash during period
 
$
101,771
   
$
332
 
 
Operating Activities
 
Net cash used in operating activities was $171,229 for the nine month period ended September 30, 2014 compared with cash used in operating activities of $81,200 in the same period in 2013. The increase in cash used in operating activities is predominantly attributable to various non-cash reconciliation adjustments including accretion of debt discount on convertible notes and the change in the fair value of our derivative liabilities, as well as increases to accounts payable and accrued expenses period over period as we were not able to retire our obligations as they became due.
 
Investing Activities
 
There were no investing activities during the nine months ended September 30, 2014 and 2013.
 
Financing Activities
 
Net cash provided by financing activities was $273,000 for the nine month period ended September 30, 2014 compared to $81,532 of cash provided in the same period in 2013.

Going Concern
 
We believe that presently we have sufficient funds to operate for the coming 12 months. Future operating activities are expected to be funded by revenues, the exercise of outstanding warrants or new loans and equity financing opportunities. We have no assurance that future financing will be available to us in the future on satisfactory terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our activities. Equity financing could result in additional dilution to existing shareholders.
 
Our Company has generated $18,366 (2014) and $11,800 (2013) in revenue in the respective nine month periods ended September 30, which amounts are not presently sufficient to cover our ongoing quarterly operating expenses. We have never paid dividends and it is unlikely we will generate sufficient earnings in the immediate or foreseeable future to meet our operational overhead. The continuation of our Company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at September 30, 2014, we had a working capital deficit of $792,928 and have an accumulated deficit of $477,074. These factors raise substantial doubt regarding our company’s ability to continue as a going concern. The financial statements included herein do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our Company be unable to continue as a going concern.
 
During the next twelve months we expect to expend approximately $50,000 for operations of the Company in regard to the filing of reports with the requisite regulatory authorities and $75,000 as required with respect the operations of wholly-owned subsidiary, Couponz, Inc., including salaries and any ongoing software development expenses. 

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

 
9

 
Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company and are not required to provide this information.
 
ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
 
As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.
 
Changes in Internal Control over Financial Reporting
 
During the period covered by this report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
10

 

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 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 shares were issued on November 17, 2014.

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

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

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

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

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

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

 
11

 
ITEM 5. OTHER INFORMATION

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.

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

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

  c.  
6% of the amount for any equity or hybrid equity capital raised over $5,000,000
  
And;
 
       an amount of restricted shares equal to 4% of capital raised divided by the closing price of the stock on the date of close.

On August 22, 2014 the Company and Quarry Bay Equity Inc. (“QB”) entered into a letter agreement whereunder QB agreed to settle outstanding debt totaling US$50,572 for a total of 2,528,600 shares at $0.02 per share.
 
On August 22, 2014, the Company entered into a convertible loan agreement with an investor.  The Company received a total of $125,000 which bears interest at 8% per annum and is due on August 22, 2015. Interest shall accrue from the advancement date and shall be payable on August 22, 2015. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price equal to 52% of the lowest trading price of the Common Stock as reported on the OTCQB exchange for the twelve (12) prior trading days including the day upon which a Notice of Conversion is received by the Company.
 
On August 28, 2014 the Company and its President and CEO Mr. David Gasparine entered into an employment contract (the “Contract”)  effective September 1, 2014 for a term of one year whereunder Mr. Gasparine will receive an annual salary of $36,000.  In addition Mr. Gasparine received a signing bonus of $5,000 upon signing of the Contract.
 
On September 17, 2014, the Company entered into a convertible loan agreement with an investor. The Company received a total of $100,000 which bears interest at 10% per annum and is due on April 16, 2015. Interest shall accrue from the advancement date and shall be payable on April 16, 2015. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of the lower of (1) a 50% discount to the average of the three lowest daily trading prices for the previous twenty (20) trading days to the date of conversion; or (2) a 50% discount to the average of the three lowest daily trading prices for the previous twenty (20) trading days before the date that this note was executed.
 
On October 17, 2014 the Company’s Board of Directors approved a 2014 Stock Option and Award Plan. Under the Stock Option and Award Plan, the Company granted Mr. Woywod, director of the Company, 500,000 stock awards and Mr. Harney, director of the Company, 3,000,000 stock awards, all of which were fully vested on the date of issue.  The Company also  granted Mr. Woywod 500,000 incentive  stock options at an exercise price of $0.03 per share for a term of 2 years form the date of grant, which options also vested immediately.
 
 
12

 

ITEM 6. EXHIBITS

     
Incorporated by reference
 
Exhibit
Exhibit Description
Filed herewith
Form
Exhibit
Filing Date
 
3.1
Articles of Incorporation
 
S-1
3.1
03/18/08
 
3.2
By-laws as currently in effect
 
S-1
3.2
03/18/08
 
10.1
Agency Agreement with Carter, Terry & Company executed August 8, 2014
 
 10-Q
  10.1
08/14/2014
 
10.2
Form of Addendum between the Company and certain investors with convertible loans expiring November 27, 2015
X
       
10.3
August 22, 2014 letter agreement between the Company and Quarry Bay Equity Inc.
X
       
10.4
Form of employment agreement between the Company and David Gasparine
X
       
10.5
2014 Stock Option and Award Plan
X
       
10.6
Form of Stock Option Agreement
X
       
10.7
Form of Stock Award Agreement
X
       
 10.8 Form of Note - LG Capital Funding LLC  X        
 10.9 Form of Note - JSJ Investments Inc. X        
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
X
       
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
X
       
32.1
Certification of Principal Executive and Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act
 X 
       
 
 
 
13

 

SIGNATURES

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

 
EPOXY, INC.
(FORMERLY NEOHYRDO TECHNOLOGIES CORP.)
 
       
Date: November 19, 2014
By:
/s/ David Gasparine
 
 
Name:
David Gasparine
 
 
Title:
Chief Executive Officer (Principal Executive Officer), Treasurer, (Principal Financial Officer) Secretary, and Director
 
       


 
14

 





RULE 13A-14(A)/15D-14(A) CERTIFICATION

I, David Gasparine, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Epoxy, Inc. (formerly Neohydro Technologies Corp.) for the period ended September 30, 2014;

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

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

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: November 19, 2014
By:
/s/ David Gasparine  
   Name:
David Gasparine
 
   Title:
Principal Executive Officer
 
       
 
 
 

 





RULE 13A-14(A)/15D-14(A) CERTIFICATION

I, David Gasparine, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Epoxy, Inc. (formerly Neohydro Technologies Corp.) for the period ended September 30, 2014;

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

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

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: November 19, 2014
By:
/s/ David Gasparine  
  Name:
David Gasparine
 
  Title:
Principal Financial Officer
 
 
 
 

 





EXHIBIT 32

Epoxy, Inc.
(Formerly Neohydro Technologies Corp.)

CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Epoxy, Inc. (Formerly Neohydro Technologies Corp.) (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Gasparine, Chief Executive Officer and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

 
(2)
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date:  November 19, 2014 
 By:
/s/ David Gasparine
 
 
 Name:
David Gasparine
 
 Title:
Principal Executive Officer, Principal Financial and Accounting Officer

A signed original of this written statement required by Section 1350 of Title 18 of the United States Code has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 1350 of Title 18 of the United States Code and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing.)
 
 

 





 
ADDENDUM No. 1 DATED AUGUST 1, 2014 TO THAT CERTAIN 10% CONVERTIBLE DEBENTURE ORIGINALLY DATED AS OF THE 27TH DAY OF NOVEMBER, 2012 BY AND  BETWEEN  EPOXY, INC. (FORMERLY NEOHYDRO TECHNOLOGIES CORP.)   AND                        IN THE ORIGINAL PRINCIPAL AMOUNT OF $       HEREINAFTER REFERRED TO AS THE “AGREEMENT”.
   
This Addendum No. 1, shall serve to remove and replace in its entirety paragraph 1 of section 5. CONVERSION, included in Exhibit A, (page 15) to that certain Agreement with the paragraph set out below;
 
“Upon issuance of this Debenture, the Holder shall have the right to convert all or any portion of the principal sum and accrued interest of this Debenture remaining and outstanding and owing to the Holder (the “Convertible Indebtedness”) (as at the date of the election to so convert) into common shares (the “Shares”) in the capital stock of the Company.  The price per share shall be $0.005 per share.  The Holder may, at its option, elect to convert the Debentures held by the Holder in accordance with the foregoing in lieu of receiving any funds payable under the Debentures.”
 
This Addendum No. 1 shall enure to the benefit of and be binding upon the parties hereto and their respective assigns, successors and personal representative(s).
 
The terms and conditions and provisions as contained in the Agreement remain in full force and effect, save for that paragraph as set out above, which shall be considered a part of the whole Agreement.
 
This Addendum No. 1 shall be appended to and form a part of the Agreement.
 

IN WITNESS WHEREOF the parties hereto have caused this Addendum No. 1 to be duly executed and delivered as of the day and year first written above.


   
EPOXY, INC.
(Formerly NeoHydro Technologies Corp.)
 
                       
    By its President
David Gasparine
 



NOTEHOLDER
 



                       
     By its duly authorized signatory


 
 

 







August 22, 2014

Quarry Bay Equity Inc.
1201 Orange Street Suite 600
Wilmington DE 19899
Contact: Tom Sharp
Email: Quarrybay@corphouse.net

Dear Sirs:

Further to our verbal agreement regarding the retirement of your outstanding debt by way of the issuance of shares of Epoxy, Inc. (the “Company”) common stock at $0.02 per share, we wish to memorialize our mutual understanding by way of this letter agreement.  Should you be in agreement with the terms noted below, please sign and return to us via Email – dave@epoxyapp.com at the very earliest opportunity.

(1)  
Debt.  As of the date of this letter the Company is currently indebted to Quarry Bay Equity Inc. (“Quarry bay”) in the amounts as noted below, and as evidenced by the attached demand promissory notes (collectively referred to as the “Notes”):

Date of Note:
 
December 14, 2011
   
November 21, 2012
   
December 14, 2011
 
Balance as at August 22, 2014
 
USD$24,150
   
USD$2,500
   
CAD$26,075
 
Converted to USD as of today’s interbank
                 
Rate of 1.09
             
USD$23,922
 
Total(USD):
  $ 24,150     $ 2,500     $ 23,922  
                    $ 50,572  

(2)  
Quarry Bay acknowledges that the Notes are non-interest bearing and due on demand;

(3)  
Effective the date hereof, Quarry Bay accepts a total of 2,528,600 shares of the common stock of the Company (the “Debt Shares”) at a price of $0.02 per share in full and final settlement of outstanding debt in the total principal amount of $50,572.

 
1

 
 
(4)  
Quarry Bay acknowledges they are a company duly incorporated under the laws of the State of Delaware and that they are not now, and have never been an affiliate of the Company.

 
(5)  
The Company will claim an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of the Debt Shares to Quarry Bay 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.

 
I trust the aforementioned correctly sets out our understanding.
 
Yours truly,


David Gasparine
President


Agreed and accepted this       day of August, 2014.



Quarry Bay Equity Inc.



 
2

 







EMPLOYMENT AGREEMENT

This Employment Agreement is made and entered into on this 28th day of August, 2014 (“Effective Date”) by and between Epoxy, Inc., a Nevada corporation (the "Company"), and David Gasparine, an individual (or an entity for which he is an owner), hereinafter  referred to as "Executive".


RECITALS

A. The Company desires to be assured of the association and services of Executive for the Company.

B. Executive is willing and desires to be employed by the Company, and the Company is willing to employ Executive, upon the terms, covenants and conditions hereinafter set forth.


AGREEMENT

NOW, THEREFORE, in consideration of the mutual terms, covenants and conditions hereinafter set forth, the parties hereto do hereby agree as follows:

1. Employment. Company agrees to employ Executive, and Executive agrees to be employed by Company, beginning as of the Effective Date and continuing until the termination date as set forth herein " (the "Term"), subject to the terms and conditions of this Agreement and further subject to the supervision and direction of the Company's Board of Directors.

2. Term. The term of this Agreement shall be for a period of One Year  (1) year commencing September 1, 2014, unless terminated earlier pursuant to Section 7 below; provided, however, that Executive's obligations in Section 6 below shall continue in effect after such termination.

2.1  
Post Term Employment.

Should Executive remain employed by Company beyond the expiration of the Term such employment shall convert to a month-to-month relationship terminable at any time by either Company or Executive for any reason whatsoever, with or without cause.

3. Scope of Duties.

3.1 Assignment of Duties. Executive shall have such duties as may be assigned to him or her from time to time by the Company's Board of Directors commensurate with his experience and responsibilities in the position for which he is employed pursuant to Section 1 above.  Such duties shall be exercised subject to the control and supervision of the Board of Directors of the Company.

 
1

 
3.2 General Specification of Duties. Executive's duties shall include, but not be limited to, the duties and performance goals as follows:

(1)  
act as President and Chief Executive Officer of the Company and perform all duties, functions and responsibilities generally associated thereto;
(2)  
personally review the financial statements of the company as may be prepared from time to time or otherwise cause to be prepared, as directed by the Company, financial statements, tax returns and other similar items respecting the operation of the Company;
(3)  
execute on behalf of the Company, in his capacity as President and Chief Executive Officer, all documents as reasonably and properly requested by the Company;
(4)  
employ, pay, supervise and discharge all Executives of the Company, and determine all matters with regard to such personnel, including, without limitation, compensation, bonuses and fringe benefits, all in accordance the policies which may be implemented by the Board of Directors of the Company;
(5)  
assist in establishing procedures for implementing the policies established by the Company;
(6)  
assist in insuring cooperation of the officers of the Company;
(7)  
assist in causing the Company to be operated in compliance with all legal requirements;
(8)  
assist in operating the Company in conformance with any plan approved by the Company, as such may be amended from time to time with the concurrence of the Company;
(9)  
Implement the Company’s business plan with a view to increasing sales and managing the Company’s other consultants and employees; and,
(10)  
Perform all other acts deemed necessary and proper for the Company, in the sole discretion of Executive.
 
The foregoing specifications are not intended as a complete itemization of the duties which Executive shall perform and undertake on behalf of the Company in satisfaction of his or her employment obligations under this Agreement.

Executive initially shall be employed in the position set forth herein..  Company may subsequently modify Executive's duties and responsibilities; provided however, in the event Company substantially reduces the duties or responsibilities of Executive, Executive may elect to terminate this Agreement and said termination shall constitute an Involuntary Termination.  Executive shall at all times comply with and be subject to such policies and procedures as Company may establish from time to time.

3.4 Executive's Devotion of Time. Executive hereby agrees to devote his time, abilities and energy to the faithful performance of the duties assigned to him or her and to the promotion and forwarding of the business affairs of the Company, and not to divert any business opportunities from the Company to himself or herself or to any other person or business entity, unless otherwise approved by the Board of Directors.

3.5 Conflicting Activities.

(1) Executive shall not, during the term of this Agreement, be engaged in any other business activity substantially similar to that of the Company’s primary business without the prior consent of the Board of Directors of the Company; provided, however, that this restriction shall not be construed as preventing Executive from investing his personal assets in any investments, including but not limited to, business entities which are not in competition with the Company or its affiliates, or from pursuing business opportunities which do not unreasonably impede his performance as executive for the Company.

(2) Executive hereby agrees to promote and develop all business opportunities that come to his attention relating to current or anticipated future business of the Company, in a manner consistent with the best interests of the Company and with his duties under this Agreement.

 
2

 
4. Compensation; Reimbursement.

4.1 Base Salary.  For all services rendered by Executive under this Agreement, the Company shall pay Executive a base salary of Thirty Thousand Dollars ($36,000.00) per annum, paid monthly (the "Base Salary"). The amount of the 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.  No such change shall in any way abrogate, alter, terminate or otherwise affect the other terms of this Agreement.

4.2 Periodic Bonuses. In addition to the Base Salary, Executive shall be eligible for periodic bonuses ("Periodic Bonuses") in amounts to be determined by the Board of Directors. The criteria upon which the Periodic Bonuses are awarded shall be at the discretion of the Board of Directors.

4.3 Reimbursement. Executive shall be reimbursed for all reasonable "out-of-pocket" business expenses for business travel and business entertainment incurred in connection with the performance of his or her duties under this Agreement so long as such expenses constitute business deductions from taxable income for the Company and are excludable from taxable income to the Executive under the governing laws and regulations of the Internal Revenue Service.

4.4 Signing Bonus.  As additional incentive and compensation to Executive, Executive shall receive a signing bonus of $5,000 payable upon execution of this Agreement.

5. Severance. So long as this Agreement is in effect, Executive shall at all times be entitled to severance benefits as may be determined by the Board of Directors in its sole discretion. These benefits may include, the Company's maintenance at its cost of a life insurance policy and disability policy on Executive payable to Executive and/or his or her legal representative or heirs as applicable, in amounts reasonably agreed to by Executive and the Company.

6. Termination.

6.1 Bases for Termination.

(1) Executive's employment may be terminated by the Company "with cause," effective upon delivery of 5 business days of written notice to Executive if any of the following shall occur:
(a) any action by Executive which would constitute a willful breach of duty or habitual neglect of duty;
(b) any material breach of Executive's obligations as described herein; or
 
(c) any material acts or events which inhibit Executive from fully performing his or her responsibilities to the Company in good faith, such as (i) a felony criminal conviction; (ii) any other criminal conviction involving Executive's lack of honesty or moral turpitude; (iii) drug or alcohol abuse; or (iv) acts of dishonesty, gross carelessness or gross misconduct.
.
(2) This Agreement shall automatically terminate on the last day of the month in which Executive dies or becomes permanently incapacitated. "Permanent incapacity" as used herein shall mean mental or physical incapacity, or both, reasonably determined by the Company's Board of Directors based upon a certification of such incapacity by, in the discretion of the Company's Board of Directors, either Executive's regularly attending physician or a duly licensed physician selected by the Company's Board of Directors, rendering Executive unable to perform substantially all of his or her duties hereunder and which appears reasonably certain to continue for at least six consecutive months without substantial improvement. Executive shall be deemed to have "become permanently incapacitated" on the date the Company's Board of Directors has determined that Executive is permanently incapacitated and so notifies Executive.

 
3

 
(3) Notwithstanding any other provisions of this  Agreement, Executive shall have the right  to terminate the employment relationship under this  Agreement at any time prior to the expiration of the Term of  employment for any of the following reasons:

(i) a breach by Company of any provision of this Agreement which remains uncorrected for 30 days following written notice of such breach by Executive to Company; or
(ii)  for any other reason whatsoever, in the sole discretion of Executive.

The termination of Executive's employment by Executive under Section 7.1(3)(i), prior  to the expiration of the Term shall constitute an  "Involuntary Termination" as though Executive was terminated by the Company without cause.  The termination of Executive's employment by  Executive prior to the expiration of the Term shall  constitute a "Voluntary Termination" if made pursuant to  Section 6.1.(3)(ii) and shall be treated as the Company was forced to terminate Executive with cause.

7. Miscellaneous.

7.1 Transfer and Assignment. This Agreement is personal as to Executive and shall not be assigned or transferred by Executive without the prior written consent of the Company, except that Executive may transfer all rights, titles and obligations he has under this Employment Agreement to an entity for which he is an owner.  This Agreement shall be binding upon and inure to the benefit of all of the parties hereto and their respective permitted heirs, personal representatives, successors and assigns.

7.2 Severability. Nothing contained herein shall be construed to require the commission of any act contrary to law. Should there be any conflict between any provisions hereof and any present or future statute, law, ordinance, regulation, or other pronouncement having the force of law, the latter shall prevail, but the provision of this Agreement affected thereby shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law, and the remaining provisions of this Agreement shall remain in full force and effect.
 
7.3 Governing Law. This Agreement is made under and shall be construed pursuant to the laws of the State of Nevada.
 
7.4 Counterparts. This Agreement may be executed in several counter parts and all documents so executed shall constitute one agreement, binding on all of the parties hereto, notwithstanding that all of the parties did not sign the original or the same counterparts.

7.5 Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior oral or written agreements, arrangements, and understandings with respect thereto. No representation, promise, inducement, statement or intention has been made by any party hereto that is not embodied herein, and no party shall be bound by or liable for any alleged representation, promise, inducement, or statement not so set forth herein.

7.6 Modification. This Agreement may be modified, amended, superseded, or cancelled, and any of the terms, covenants, representations, warranties or conditions hereof may be waived, only by a written instrument executed by the party or parties to be bound by any such modification, amendment, super-session, cancellation, or waiver.

7.7 Attorneys' Fees and Costs. In the event of any dispute arising out of the subject matter of this Agreement, the prevailing party shall recover, in addition to any other damages assessed, its attorneys' fees and court costs incurred in litigating or otherwise settling or resolving such dispute whether or not an action is brought or prosecuted to judgment. In construing this Agreement, none of the parties hereto shall have any term or provision construed against such party solely by reason of such party having drafted the same.

 
4

 
7.8 Waiver. The waiver by either of the parties, express or implied, of any right under this Agreement or any failure to perform under this Agreement by the other party, shall not constitute or be deemed as a waiver of any other right under this Agreement or of any other failure to perform under this Agreement by the other party, whether of a similar or dissimilar nature.

7.9 Cumulative Remedies. Each and all of the several rights and remedies provided in this Agreement, or by law or in equity, shall be cumulative, and no one of them shall be exclusive of any other right or remedy, and the exercise of any one of such rights or remedies shall not be deemed a waiver of, or an election to exercise, any other such right or remedy.

7.10 Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning and interpretation of this Agreement.

7.11 Survival. Any provision of this Agreement which imposes an obligation after termination or expiration of this Agreement shall survive the termination or expiration of this Agreement and be binding on Executive and the Company.

7.12 Effective Date. This Agreement shall become effective as of the date set forth on page 1 when signed by Executive and the Company.

IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be executed as of the date first set forth above.


Executive


_______________________________
David Gasparine


Company



____________________________________________
Director


____________________________________________
Director

 
5

 






EPOXY INC.

2014 STOCK OPTION
AND STOCK AWARD PLAN
(this “PLAN”)

1.           Definitions

Each of the following terms shall have the respective meanings set forth below for purposes of this Plan, whether employed in the singular or plural unless the particular context in which said term is used clearly indicates otherwise:
 
 
(a)
“Administrator” shall mean, during the entire term of this Plan, the person or persons appointed by the Board to administer this Plan or in the event that no such person is appointed, the Board shall be deemed the Administrator.
 
(b)           “Board” shall mean the Company’s Board of Directors.
 
 
(c)
“Common Stock” shall mean the common stock of the Company, par value $0.00001 per share.

 
(d)
“Company” shall mean Epoxy, Inc., a Nevada corporation.

 
(e)
“Directors” shall mean each and every member of the Board of Directors of the Company (as such term is defined below) as presently constituted and as may otherwise be constituted during the term hereof.

 
(f)
“Effective Date” shall mean as of the date this Plan is adopted by the Board of Directors of the Company.

 
(g)
“Option” shall mean the right to purchase a specified number of shares of the Common Stock pursuant to the terms and conditions set forth in this Plan.

 
(h)
“Optionee” shall mean the recipient of Options hereunder.  Any reference herein to the employment or consultancy of an Optionee by the Company shall include Optionee’s employment or consultancy by the Company or its subsidiaries, if any.

(i)           “Plan Termination Date” shall mean the date upon which this Plan terminates.

 
(j)
“Stock Award” shall mean the granting and issuance of the Common Stock pursuant to the terms and conditions set forth in this Plan.

2.
Purpose

The purpose of this Plan is to maintain the ability of the Company and its subsidiaries (if any) to attract and retain highly qualified and experienced directors, officers, employees and consultants (“Participants”) and to give such Participants a continued proprietary interest in the success of the Company and its subsidiaries.  Pursuant to this Plan, eligible Participants will be provided the opportunity to participate in the enhancement of shareholder value through the grants of options, stock appreciation rights, awards of free trading stock and restricted stock, bonuses and/or fees payable in stock, or any combination thereof.  The term “subsidiary” as used in this Plan shall mean any present or future corporation which is or would be a “subsidiary corporation” of the Company as the term is defined in Section 424(f) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).

 
PAGE 1 OF 11

 
 
3.
Administrator(s) of this Plan
 
 
(a)
Powers of the Administrator: .Subject to the provisions of paragraph 5 hereof, this Plan shall be administered by the Administrator, and the Administrator shall have the authority, in its discretion:
 
 
(i)
to determine the fair market value of the securities to be issued under this Plan;
 
 
(ii)
to select the participants to whom the Options and Stock Awards may be granted hereunder;
 
 
(iii)
to determine whether and to what extent Options or Stock Awards or any combination thereof, are granted hereunder;
 
 
(iv)
to determine the number of shares of Common Stock or equivalent units to be covered by each Option and Stock Award granted hereunder;
 
(v)           to approve forms of agreement for use under this Plan;
 
 
(vi)
to determine the terms and conditions, not inconsistent with the terms of this Plan, of any Option or Stock Award granted hereunder.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration, and any restriction or limitation regarding any Option or Stock Award or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;
 
 
(vii)
to construe and interpret the terms of this Plan and Options or Stock Awards;
 
 
(viii)
to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;
 
 
(ix)
to modify or amend each Option or Stock Award (subject to Section 18(c) of the Plan);
 
 
(x)
to authorize any person to execute on behalf of the Company any instrument or treasury order required to effect the grant of an Option or Stock Award previously granted by the Administrator;
 
 
(xi)
to make all other determinations deemed necessary or advisable for administering this Plan.
 
 
(b)
Effect of Administrator's Decision:  The Administrator's decisions, determinations and interpretations shall be final and binding on the Company, all participants and any other holders of Options or Stock Awards.
 
 
PAGE 2 OF 11

 

 
(c)
Each grant or award made pursuant to this Plan shall be evidenced by an Option Agreement or Stock Award Agreement (the "Agreement").  No person shall have any rights under any option, restricted stock or other award granted under this Plan unless and until the person to whom such Option, restricted stock or other Stock Award shall be granted shall have executed and delivered an Agreement to the Company.  The Administrator(s) shall prescribe the form of all Agreements. A fully executed counterpart of the Agreement shall be provided to both the Company and the recipient of the grant or award.

 
(d)
The Company shall indemnify and hold harmless the Directors and the Administrator(s) from and against any and all liabilities, costs and expenses incurred by such persons as a result of any act, or omission to act, in connection with the performance of such persons' duties, responsibilities, and obligations under this Plan, other than such liabilities, costs and expenses as may result from the gross negligence, bad faith, willful misconduct, and/or criminal acts of such persons.

4.           Shares of Stock Subject to this Plan

The maximum number of shares of the common stock, par value $0.00001 per share, that may be optioned or awarded under this Plan is 10,000,000 shares, subject to adjustment as provided in Section 15 hereof.  Any shares subject to an Option which for any reason expires or is terminated unexercised and any restricted stock which is forfeited may again be optioned or awarded under this Plan; provided, however, that forfeited shares shall not be available for further awards if the Participant has realized the benefits of ownership from such shares.  Shares subject to this Plan may be either, authorized and un-issued shares or issued shares repurchased or otherwise acquired by the Company or its subsidiaries.

5.           Grant of Options

 
(a)
The Administrator(s) shall have the authority and responsibility, within the limitations of this Plan, to determine the Officers, Directors, employees and consultants to whom and the times at which Options are to be granted, the number of shares of Common Stock which may be purchased under each Option, the provisions of the respective Option Agreements (which need not be identical) including provisions concerning the time or times when, and the extent to which, the Options may be exercised, and the Option exercise price.  All Options pursuant to this Plan shall be granted on or before the Plan Termination Date.

 
(b)
In determining the Officers, Directors, employees and consultants to whom Options shall be granted, the number of shares of Common Stock to be covered by each such Option, and the provisions of the respective Option Agreements, the Administrator(s) shall take into consideration the Directors, Officers, employee’s or consultant’s present and potential contribution to the success of the Company and such other factors as the Administrator(s) may deem proper and relevant.

 
(c)
The aggregate fair market value (determined as of the date upon which an Option is granted) of the Common Stock for which any Optionee may exercise incentive stock options for the first time in any calendar year (under all plans of the Company and any parent or subsidiary of the Company which plans provide for granting of incentive stock options within the meaning of Section 422(b) of the Code) shall not exceed $100,000.


 
PAGE 3 OF 11

 

6.           Eligibility

Directors, employees, Officers, of the Company and its divisions and subsidiaries, and consultants who provide bona fide services to the Company are eligible to be granted Options, free trading stock, restricted stock and other Stock Awards under this Plan and to have their salaries, bonuses and/or consulting fees payable in free trading stock, restricted stock and other Stock Awards.  The Directors, Officers, employees, and consultants who shall receive awards or options under this Plan, and the criteria to be used in determining the award to be made, shall be determined from time to time by the Administrator(s), in their sole discretion, subject to the limitations set forth in Section 8 below, from among those eligible, which may be based upon information furnished to the Administrator(s) by the Company's management; and the Administrator(s) shall determine, in their sole discretion, the number of shares to be covered by each Stock Award and option granted to each Director, Officer, employee or consultant selected.

7.           Duration of this Plan

No award or Option may be granted under this Plan after more than ten (10) years from the earlier of the date this Plan is adopted by the Board.

8.           Terms and Conditions of Stock Options

Options granted under this Plan may be either incentive stock options, as defined in Section 422 of the Code, or Options other than incentive stock options.  Each Option shall be subject to all the applicable provisions of this Plan, including the following terms and conditions, and to such other terms and conditions not inconsistent therewith as the Administrator(s) shall determine:

 
(a)
The Option price per share shall be set by the Board of Directors at the time of each Stock Award issuance or Option grant.

 
(b)
The exercise of certain Options granted under this Plan may be subject to the attainment of such performance goals, and/or during such period as may be determined by the Administrator(s) and stated in the Agreement.
 
 
(c)
An Option shall not be exercisable with respect to a fractional share of Common Stock or with respect to the lesser of fifty (50) shares or the full number of shares then subject to the Option. No fractional shares of Common Stock shall be issued upon the exercise of an Option. If a fractional share of Common Stock shall become subject to an Option by reason of a stock dividend or otherwise, the Optionee shall not be entitled to exercise the Option with respect to such fractional share.

 
(d)
Each Option shall state whether it will or will not be treated as an incentive stock option.

 
(e)
Each Option will be deemed exercised on the day written notice specifying the number of shares to be purchased, accompanied by payment in full including, if required by law, applicable taxes, is received by the Company.  Payment, except as provided in the Agreement shall be:

        (i)   in United States dollars by check or bank draft, or

 
PAGE 4 OF 11

 

(ii)  
by tendering to the Company shares of Common Stock already owned for at least six months by the person exercising the Option, which may include shares received as the result of a prior exercise of an Option, and having an aggregate fair market value, on the date on which the Option is exercised,  equal to the total cash exercise price applicable to the Options being exercised, or

 
(iii)  
by a combination of United States dollars and shares of Common Stock valued as aforesaid.

For purposes of this Plan, fair market value shall be the mean between the highest and lowest prices at which the Common Stock is traded on a national securities exchange or an automated securities quotation exchange on the relevant date, provided however, if there is no sale of the Common Stock on such exchange on such date, fair market value shall be the mean between the bid and asked prices on such exchange at the close of the market on such date.  No Optionee shall have any rights to dividends or other right of a shareholder with respect to shares of Common Stock subject to his or her Option until he or she has given written notice of exercise of such Option and paid in full for such shares.

 
(f)
Notwithstanding the foregoing, the Administrator(s) may, in their sole discretion, include in the Agreement a provision to allow for the cashless exercise of any Options granted by such Agreement under this Plan.

 
(g)
The Administrator(s) may, in their discretion, include in the grant of any Option the right of a grantee (hereinafter referred to as a “stock appreciation right”) to elect, in the manner described below, in lieu of exercising his or her Option for all or a portion of the shares of Common Stock covered by such Option, to relinquish his or her Option for all or a portion of the such shares and to receive from the Company a payment equal in value to (x) the fair market value, as determined in accordance with Section 8(e), of a share of Common Stock on the date of such election, multiplied by the number of shares as to which the grantee shall have made such election, less (y) the exercise price for that number of shares of Common Stock for which the grantee shall have made such election under the terms of such Option.  A stock appreciation right shall be exercisable at the time the tandem option is exercisable, and the “expiration date” for the stock appreciation right shall be the amount described in (x) above exceeds the amount described in (y) above.  An election to exercise stock appreciation rights shall be deemed to have been made on the day written notice of such election, addressed to the Administrator(s), is received by the Company.  An Option or any portion thereof with respect to which a grantee has elected to exercise a stock appreciation right shall be surrendered to the Company and such Option shall thereafter remain exercisable according to its terms only with respect to the number of shares as to which it would otherwise be exercisable, less the number of shares with respect to which stock appreciation rights have been exercised.  The grant of a stock appreciation right shall be evidenced by an Agreement.  The Agreement evidencing stock appreciation rights shall be personal and will provide that the stock appreciation rights will not be transferable by the grantee otherwise than by will or the laws of descent and distribution and that they will be exercisable, during the lifetime of the grantee, only by him or her.

 
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(h)
Except as provided in the applicable Agreement, an Option may be exercised only if at all times during the period beginning with the date of the granting of the Option and ending on the date of such exercise, the grantee was a consultant or employee of either the Company (or of a division) or subsidiary of the Company or of another corporation referred to in Section 421(a)(2) of the Code.  The Agreement shall provide whether, and to what extent, an Option may be exercised after termination of continuous employment, but any such exercise shall in no event be later than the termination date of the Option.  If the grantee should die, or become permanently disabled as determined by the Administrator(s) at any time when the Option, or any portion thereof, shall be exercisable, the Option will be exercisable within a period provided for in the Agreement, by the Optionee or person or persons to whom his or her rights under the Option shall have passed by will or by the laws of descent and distribution, but in no event at a date later than the termination of the Option. The Administrator(s) may require medical evidence of permanent disability, including medical examinations by physicians selected by it.

 
(i)
Each Option by its terms shall be personal and shall not be transferable by the Optionee otherwise than by will or by the laws of descent and distribution.  During the lifetime of an Optionee, the Option shall be exercisable only by the Optionee.  In the event any Option is exercised by the executors, administrators, heirs or distributees of the estate of a deceased Optionee as provided in Section 8(h) above, the Company shall be under no obligation to issue Common Stock thereunder unless and until the Company is satisfied that the person or persons exercising the Option are the duly appointed legal representatives of the deceased Optionee’s estate or the proper legatees or distributes thereof.

 
(j)
No incentive stock option shall be granted to an employee  who owns or would be treated as owning by attribution under Code Section 424(d) immediately before the grant of such incentive stock option, directly or indirectly, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company.  This restriction shall not apply if, (i) at the time such incentive stock option is granted, the Option price is at least 110% of the fair market value of the shares of Common Stock subject to the Option, as determined in accordance with Section 8(e) on the date of grant, and (ii) the incentive stock option by its terms is not exercisable after the expiration of five years from the date of its grant.

 
(k)
An Option and any Common Stock received upon the exercise of an Option shall be subject to such other transfer restriction and/or legending requirements as are specified in the applicable Agreement.

 
(l)
No Options or Stock Awards shall be made to any consultant in exchange for or as compensation for capital raising, investor relations or stock promotion.

 
(m)
Any Options or Stock Awards that are made to any Directors shall be held in trust by the Company until such issuance or issuances are approved by shareholders of the Company holding no less than a majority of the Company’s outstanding shares of common stock at the time of such approval.

9.           Terms and Conditions of Restricted Stock Awards

Awards of restricted stock under this Plan shall be subject to all the applicable provisions of this Plan, including the following terms and conditions, and to such other terms and conditions not inconsistent therewith, as the Administrator(s) shall determine:

 
PAGE 6 OF 11

 


 
(a)
Awards of restricted stock may be in addition to or in lieu of Option grants.  Awards may be conditioned on the attainment of particular performance goals based on criteria established by the Administrator(s) at the time of each award of restricted stock.  During a period set forth in the Agreement (the "Restriction Period"), the recipient shall not be permitted to sell, transfer, pledge, or otherwise encumber the shares of restricted stock; except that such shares may be used, if the Agreement permits, to pay the option price pursuant to any Option granted under this Plan, provided an equal number of shares delivered to the Optionee shall carry the same restrictions as the shares so used.

 
(b)
Shares of restricted stock shall become free of all restrictions if during the Restriction Period, (i) the recipient dies, (ii) the recipient's directorship, employment, or consultancy terminates by reason of permanent disability, as determined by the Administrator(s), (iii) the recipient retires after attaining both 59 1/2 years of age and five years of continuous service with the Company and/or a division or subsidiary, or (iv) if provided in the Agreement, there is a "change in control" of the Company (as defined in such Agreement).  The Administrator(s) may require medical evidence of permanent disability, including medical examinations by physicians selected by it.

 
(c)
Unless and to the extent otherwise provided in the Agreement, shares of restricted stock shall be forfeited and revert to the Company upon the recipient's termination of directorship, officership, employment or consultancy during the Restriction Period for any reason other than death, permanent disability, as determined by the Administrator(s), retirement after attaining both 59 1/2 years of age and five years of continuous service with the Company and/or a subsidiary or division, or, to the extent provided in the Agreement, a "change in control" of the Company (as defined in such Agreement), except to the extent the Administrator(s), in their sole discretion, finds that such forfeiture might not be in the best interests of the Company and, therefore, waives all or part of the application of this provision to the restricted stock held by such recipient.
 
 
(d)
Stock certificates for restricted stock shall be registered in the name of the recipient but shall be appropriately legended and returned to the Company by the recipient, together with a stock power endorsed in blank by the recipient.  The recipient shall be entitled to vote shares of restricted stock and shall be entitled to all dividends paid thereon, except that dividends paid in Common Stock or other property shall also be subject to the same restrictions.

 
(e)
Restricted Stock shall become free of the foregoing restrictions upon expiration of the applicable Restriction Period and the Company shall then deliver to the recipient Common Stock certificates evidencing such stock.

 
(f)
Restricted stock and any Common Stock received upon the expiration of the restriction period shall be subject to such other transfer restrictions and/or legending requirements as are specified in the applicable Agreement.

10.           Bonuses and Past Salaries and Fees Payable in Stock

 
(a)
In lieu of cash bonuses otherwise payable under the Company’s or applicable division’s or subsidiary’s compensation practices to Directors, officers, employees and consultants eligible to participate in this Plan, the Administrator(s), in their sole discretion, may determine that such bonuses shall be payable in Common Stock or partly in Common Stock and partly in cash. Such bonuses shall be in consideration of services previously performed and as an incentive toward future services and shall consist of shares of Common Stock which shall be free trading unless otherwise determined by the Administrator(s) in their sole discretion. The number of shares of Common Stock payable in lieu of a bonus otherwise payable shall be determined by dividing such bonus amount by the fair market value of one share of Common Stock on the date the bonus is payable, plus ten percent with fair market value determined as of such date in accordance with Section 8(e).

 
PAGE 7 OF 11

 

 
(b)
In lieu of salaries and fees otherwise payable by the Company to Directors, officers, employees and consultants eligible to participate in this Plan that were incurred for services rendered at any time to the Company, in the event such Directors, officers, employees or consultants elect, the Administrator(s) may provide that such unpaid salaries and fees shall be payable in Common Stock or partly in Common Stock and partly in cash.  Such awards shall be in consideration of services previously performed and as an incentive toward future services and shall consist of shares of Common Stock subject to such terms as the Administrator(s) may determine in their sole discretion.  The number of shares of Common Stock payable in lieu of salaries and fees otherwise payable shall be determined by the Administrator.

11.           Change in Control

Each Agreement may, in the sole discretion of the Administrator(s), provide that any or all of the following actions may be taken upon the occurrence of a change in control (as defined in the Agreement) with respect to the Company:

 
(a)
acceleration of time periods for purposes of vesting in, or realizing gain from, or exercise of any outstanding Option or stock appreciation right or shares of restricted stock awarded pursuant to this Plan;

 
(b)
offering to purchase any outstanding Option or stock appreciation right or shares of restricted stock made pursuant to this Plan from the holder for its equivalent cash value, as determined by the Administrator(s), as of the date of the change in control; or

 
(c)
making adjustments or modifications to outstanding Options or stock appreciation rights or with respect to restricted stock as the Administrator(s) deems appropriate to maintain and protect the rights and interests of the Participants following such change in control, provided, however, that the exercise period of any option may not be extended beyond 10 years from the date of grant.

12.           Transfer, Leave of Absence

For purposes of this Plan:

 
(a)
transfer of an employee from the Company the division or subsidiary of the Company, whether or not incorporated, or vice versa, or from one division or subsidiary of the Company to another, and

 
(b)
a leave of absence, duly authorized in writing by the Company or a subsidiary or division of the Company, shall not be deemed a termination of employment.

 
PAGE 8 OF 11

 


13.           Rights of Directors, Officers, Employees and Consultants

 
(a)
No person shall have any rights or claims under this Plan except in accordance with the provisions of this Plan and each Agreement.

 
(b)
Nothing contained in this Plan and Agreement shall be deemed to give any Director, Officer, employee or consultant the right to continued employment by the Company or its divisions or subsidiaries.

14.           Withholding Taxes

The Company shall require a payment from a Participant to cover applicable withholding for income and employment taxes upon the happening of any event pursuant to this Plan which requires such withholding.  The Company reserves the right to offset such tax payment from any funds which may be due the Participant from the Company or its subsidiaries or divisions or, in its discretion, to the extent permitted by applicable law, to accept such tax payment through the delivery of shares of Common Stock owned by the Participant or by utilizing shares of the Common Stock which were to be delivered to the Participant pursuant to this Plan, having an aggregate fair market value, determined as of the date of payment, equal to the amount of the payment due.

15.           Adjustments

In the event of stock dividends, stock splits, recapitalizations, mergers, consolidations, combinations, exchanges of shares, spin-offs, liquidations, reclassifications or other similar changes in the capitalization of the Company, the number of shares of Common Stock available for grant under this Plan shall be adjusted appropriately by the Board, and, where deemed appropriate, the number of shares covered by outstanding stock options and stock appreciation rights outstanding and the number of shares of restricted stock outstanding, and the option price of outstanding stock options, shall be similarly adjusted. If another corporation or other business entity is acquired by the Company, and the Company has assumed outstanding employee option grants under a prior existing plan of the acquired entity, similar adjustments are permitted at the discretion of the Administrator(s).  In the event of any other change affecting the shares of Common Stock available for awards under this Plan, such adjustment, if any, as may be deemed equitable by the Administrator(s), shall be made to preserve the intended benefits of this Plan giving proper effect to such event.

16.           Miscellaneous Provisions

 
(a)
This Plan shall be unfunded.  The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the issuance of shares or the payment of cash upon exercise of any option or stock appreciation right under this Plan.  The expenses of this Plan shall be borne by the Company.

 
(b)
The Administrator(s) may, at any time and from time to time after the granting of an Option or the award of restricted stock or bonuses payable in Common Stock hereunder, specify such additional terms, conditions and restrictions with respect to such Option or stock as may be deemed necessary or appropriate to ensure compliance with any and all applicable laws, including, but not limited to, the Code, federal and state securities laws and methods of withholding or providing for the payment of required taxes.

 
PAGE 9 OF 11

 


If at any time the Administrator(s) shall determine in its discretion that the listing, registration or qualification of shares of Common Stock upon any national securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the sale or purchase of shares of Common Stock hereunder, no Option or stock appreciation right may be exercised or restricted stock or stock bonus may be transferred in whole or in part unless and until such listing registration, qualification, consent or approval shall have been effected or obtained, or otherwise provided for, free of any conditions not acceptable to the Administrator(s).

(c)  
By accepting any benefit under this Plan, each Participant and each person claiming under or through such Participant shall be conclusively deemed to have indicated his acceptance and ratification, and consent to, any action taken under this Plan by the Administrator(s), the Company or the Board.

(d)  
This Plan shall be governed by and construed in accordance with the laws of the Company’s state of incorporation.

 
(f)
Administrator(s) members exercising their functions under this Plan are serving as directors of the Company and they shall therefore be entitled to all rights of indemnification and advancement of expenses accorded directors of the Company.

17.
Limits of Liability

 
(a)
Any liability of the Company or a subsidiary of the Company to any Participant with respect to any option or award shall be based solely upon contractual obligations created by this Plan and Agreement.

 
(b)
Neither the Company nor a division or subsidiary of the Company, nor any member of the Administrator(s) or the Board, nor any other person participating in any determination of any question under this Plan, or in the interpretation, administration or application of this Plan, shall have any liability to any party for any action taken or not taken in connection with this Plan, except as may expressly be provided by statute.

18.           Amendments and Termination

The Board may, at any time, amend, alter or discontinue this Plan; provided, however, no amendment, alteration or discontinuation shall be made which would impair the rights of any holder of an award of restricted stock, Option, stock appreciation rights or stock bonus theretofore granted, without his or her written consent, or which, without the approval of the shareholders would:

 
(a)
except as provided in Section 15, increase the maximum number of shares of Common Stock which may be issued under this Plan;

 
(b)
except as provided in Section 15, decrease the option price of an Option (and related stock appreciation rights, if any) to less than 100% of the fair market value (as determined in accordance with Section 8(e)) of a share of Common Stock on the date of the granting of the Option (and related stock appreciation rights, if any);

 
PAGE 10 OF 11

 

 
(c)
materially change the class of persons eligible to receive an award of restricted stock or Options or stock appreciation rights under this Plan;

(d)           extend the duration of this Plan; or

(e)           materially increase in any other way the benefits accruing to Participants.

19.
Duration

This Plan shall be adopted by the Board and approved by the Company’s shareholders and such regulatory bodies as may in each case be necessary, which approvals, if required, must occur either before, or no later than the period ending twelve months after the date, this Plan is adopted.  Subject to such approvals, grants and awards may be made under this Plan between the date of its adoption and receipt of such approvals.  This Plan shall terminate upon the earlier of the following dates or events to occur:

(a)           upon the adoption of a resolution of the Board terminating this Plan;

 
(b)
the date all shares of Common Stock subject to this Plan are purchased according to this Plan’s provisions; or

 
(c)
ten years from the date of adoption of this Plan by the Board.

 
No such termination of this Plan shall adversely affect the rights of any Participant hereunder and all Options or stock appreciation rights previously granted and restricted stock and stock bonuses awarded hereunder shall continue in force and in operation after the termination of this Plan, except as they may be otherwise terminated in accordance with the terms of this Plan.

20.           Other Compensation Plans

This Plan shall not be deemed to preclude the implementation by the Company or its divisions or subsidiaries of other compensation plans which may be in effect from time to time, nor adversely affect any rights of Participants under any other compensation plans of the Company or its divisions or subsidiaries.

21.           Non-Transferability

No right or interest in any award granted under this Plan shall be assignable or transferable, except as set forth in this Plan and required by law, and no right or interest of any participant in any award shall be liable for, or subject to, any lien, obligation or liability except as set forth in this Plan or as required by law.


 
PAGE 11 OF 11

 





EPOXY INC.
 
NOTICE OF STOCK OPTION GRANT
 

UNLESS OTHERWISE  DEFINED  HEREIN,  THE  TERMS  DEFINED  IN THE  EPOXY INC. 2014 STOCK OPTION AND STOCK AWARD PLAN SHALL HAVE THE SAME DEFINED MEANINGS  IN THE  ATTACHED  STOCK  OPTION  AGREEMENT,  OF WHICH  THIS  NOTICE  OF STOCK  OPTION GRANT IS A PART.
 
I. NOTICE OF STOCK OPTION GRANT:
 
             you have been granted an option to purchase Common Stock (the "Common  Stock") of Epoxy Inc., subject to the terms and conditions of the Epoxy Inc. Stock Option and Stock A ward Plan and the attached Stock Option Agreement as follows:
 
 
Grant Number:
     
Date of Grant:      
Vesting Commencement Date:
     
Exercise Price per Share:
     
Total Number of Shares Granted:
     
Total Exercise Price:
     
Type of Option:
Incentive Stock Option:
   
 
Non-Statutory Option:
   
Term/Expiration Date:
     
       
VESTING SCHEDULE: This Option may be exercised, in whole or in part, in accordance with the following schedule:
       
       
                                                                                                           
 
 
1

 

 
STOCK OPTION AGREEMENT RECITALS
 
A.  The Board of Directors of  Epoxy Inc., A Nevada (the "Company"), have adopted the  2014  Stock  Option  and  Stock  Award  Plan  (the "Plan")  for  the  purpose  of  retaining  the services  of selected  Directors,  Officers,  Employees  and  Consultants  and  other  independent  advisors  who  provide services to the Company (or any Subsidiary).
 
B. Optionee has rendered valuable services to the Company (or a Subsidiary), and this Stock Option Agreement (this "Agreement")   is executed pursuant to, and is intended to carry out the purposes of  the Plan in connection with the Company's grant of an option to a Director of the Company (the "Optionee").
 
C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached
 
Appendix.
 
NOW, THEREFORE, it is hereby agreed as follows:
 
1.     GRANT OF OPTION. The Company hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.
 
    2.      OPTION TERM. This option shall have a maximum  term of five (5) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration  Date as defined  in the Notice of Grant, unless sooner terminated in accordance with Paragraph 5
or 6.
     3.       LIMITED TRANSFERABILITY.
 
(a) This option shall be neither transferable nor assignable by Optionee other than by will or by the laws of descent and distribution following Optionee's death and may be exercised, during Optionee's lifetime, only by Optionee. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary  or  beneficiaries  upon  the  Optionee's  death  while  holding  such  option.  Such  beneficiary  or beneficiaries  shall  take the  transferred  option  subject  to all  the terms and  conditions  of  this Agreement, including (without limitation) the limited time period during which this option may, pursuant to paragraph 5, be exercised following Optionee's death.
 
(b) If this option is designated a Non-Statutory Option in the grant Notice, then this option may, in connection  with the Optionee's estate plan, be assigned in whole or in part during Optionee's lifetime to one or more members of Optionee's immediate family or to a trust established for the exclusive benefit of one or more such family members. The assigned  portion shall be exercisable  only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment.
 
4.      DATES OF EXERCISE. This option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments,

 
2

 
 
those installments shall accumulate and the option shall remain exercisable for the accumulated  installments until the Expiration Date as specified in the Grant Notice or earlier termination of the option hereunder either Paragraph 5, 6 or 7 below.
 
5.    CESSATION  OF SERVICE. The option term specified in Paragraph 2 shall terminate (and this option  shall cease  to be outstanding)  prior to the Expiration  Date should any of the following  provisions become applicable:
 
(a) Should  Optionee  die  while holding  this option,  then the personal  representative  of Optionee's
 
estate or the person or persons to whom the option is transferred pursuant to Optionee's will or in accordance with the laws of inheritance  shall have the right to exercise this option;  provided, however, if Optionee  has designated  one or  more  beneficiaries  of this option,  then those  persons  shall  have  the exclusive  right  to exercise  this option following  Optionee's  death until the EARLIER of (i) the expiration  of the twelve (12) month period measured from the date of Optionee's death or (ii) the Expiration Date;
 
     (b) Should Optionee cease Service by reason of Permanent Disability while holding this option, then Optionee  shall have a period of twenty-four  (24) months (commencing  with the date of such cessation  of Service) during which to exercise this option;   provided, however,  in no event shall this option be exercisable at any time after the Expiration Date;
 
(c) Should Optionee's Service be terminated either by the Optionee or by the Company other  than Misconduct  then this option shall automatically  expire  upon the EARLIER of (i) sixty (60) days from the date of such termination  unless exercised  prior to the end of such sixty (60) day period or (ii) the Expiration Date; and
 
(d)  Should  Optionee's  Service  be  terminated  for  Misconduct,   then  this  option  shall  terminate immediately and cease to remain outstanding on the date of termination.

6.       SPECIAL ACCELERATION OF OPTION.

(a) This option, to the extent outstanding  at the time of a Corporate Transaction  but not otherwise fully exercisable,  shall automatically  accelerate  so that this option shall, immediately  prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option and may be exercised  for any or all of those Option Shares as fully vested shares of Common Stock. No such acceleration  of this option shall occur, however, if and to the extent: (i) this option is, in connection with the Corporate  Transaction,  to be assumed  by the successor  company  (or parent  thereof),  or (ii)  this option is to be replaced with a cash incentive program of the successor company which preserves the spread existing at the time of the Corporate Transaction on the Option Shares for which this option is not otherwise at that  time exercisable  (the excess  of the Fair Market  Value of those Option  Shares  over  the aggregate Exercise  Price  payable  for such shares)  and provides for subsequent  payout in accordance  with the same option exercise/vesting  schedule set forth in the Grant Notice.
 
   (b)  Immediately  following  the Corporate  Transaction,  this option  shall  terminate  and cease  to be outstanding, except to the extent assumed by the successor company (or parent thereof) in connection with the Corporate Transaction.

 
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     (c) If this option is assumed  in connection  with a Corporate Transaction,  then this option  shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities  which would have been issuable to Optionee in consummation  of such Corporate Transaction  had the option  been exercised  immediately  prior to such Corporate  Transaction,  and appropriate  adjustments shall also be made to the Exercise Price, PROVIDED the aggregate Exercise Price shall remain the same.
 
       (d)  This  Agreement  shall not  in any  way affect  the  right  of  the Company  to adjust,  rec1assify, reorganize  or otherwise change  its capital or business structure or to merge, consolidate,  dissolve, liquidate or sell or transfer aJI or any part of its business or assets.
 
7.    INVOLUNTARY  TERMINATION  FOLLOWING  CORPORATE  TRANSACTION/CHANGE IN CONTROL.
 
    (a)          To the extent  the Option  is, in connection  with a Corporate Transaction,  to be assumed  in accordance  with Paragraph 6 of the Option Agreement, the Option shall not accelerate upon the occurrence of that Corporate Transaction,  and the Option shall accordingly continue, over Optionee's period of Service after the Corporate Transaction,  to become exercisable for the Option Shares in one or more installments  in accordance   with  the  provisions  of  the  Option  Agreement.  However,  immediately  upon  an  Involuntary Termination  of Optionee's  Service  within eighteen ( 18) months following  such Corporate Transaction,  the assumed Option, to the extent outstanding at the time but not otherwise fully exercisable, shall automatically accelerate  so that the Option  shall become  immediately  exercisable  for all the Option  Shares  at the time subject to the Option and may be exercised for any or all of those Option Shares as fully vested shares.
 
(b)      The Option shall not accelerate  upon the occurrence of a Change in Control, and the Option shall, over Optionee's  period of Service following  such Change in Control, continue  to become exercisable for  the  Option  Shares  in  one  or  more  installments   in  accordance   with  the  provisions  of  the  Option Agreement.  However, immediately  upon an Involuntary Termination  of Optionee's Service within eighteen (18)  months  following  the Change  in Control,  the Option,  to the extent  outstanding  at  the time  but  not otherwise fully exercisable, shall automatically  accelerate so that the Option shall become immediately exercisable  for all the Option Shares at the time subject to the Option and may be exercised for any or all of those Option Shares as fully vested shares.
 
(c)        The Option  as accelerated  pursuant  to this Section  7 shall remain  so exercisable  until the EARLIER of (i) the Expiration Date or (ii) the expiration of the one (1)-year period measured from the date of the Optionee's Involuntary Termination.
 
(d)  The provisions of this Paragraph 7 shall govern the period for which the Option is to remain exercisable  following  the Involuntary  Termination  of Optionee's Service  within eighteen  (18) months after the  Corporate  Transaction  or  Change  in Control  and  shall  supersede  any  provisions  to  the contrary  in Paragraph 5 of the Option Agreement.

 
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8.      ADJUSTMENT IN OPTION SHARES. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting  the outstanding Common Stock as a class without the Company's receipt of consideration, appropriate adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.
 
    9.       STOCKHOLDER  RIGHTS.  The holder of this option shall not have any stockholder  rights with respect to the Option Shares until such person shall have exercised  the option, paid the Exercise Price and become a holder of record of the purchased shares.
 
10.        MANNER OF EXERCISING OPTION.
 
     (a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:
 
(i) Execute and deliver to the Company a Notice of Exercise for the Option Shares for which the option is exercised; and
 
     (ii)  Pay  the  aggregate  Exercise  Price  for  the  purchased  shares  in  one  or  more  of  the following forms:
 
   (A) cash or check made payable to the Company;
 
(B) a promissory note payable to the Company, but only to the extent authorized by the Plan Administrator in accordance with Paragraph 14; or
 
(C) shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Company's earnings  for financial  reporting  purposes and valued at Fair Market Value on the Exercise Date.
 
11.        COMPLIANCE WITH LAWS AND REGULATIONS.
 
   (a) The exercise  of this option and the issuance of the Option Shares upon such exercise  shall be subject to compliance  by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance.
 
(b) The  inability  of the Company  to obtain approval  from any regulatory  body having  authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock  as to which such approval shall not have been obtained. The Company,  however, shall use its best efforts to obtain all such approvals.

 
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12.      SUCCESSORS  AND ASSIGNS. Except to the extent otherwise provided in Paragraphs 3, 6 and 7, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee's assigns, the legal representatives, heirs and legatees of Optionee's estate and any beneficiaries of this option designated by Optionee.
 
13.      NOTICES. Any notice required to be given or delivered to the Company under the terms of this Agreement  shall  be in writing and addressed  to the Company  at its principal corporate  offices. Any notice required to be given  or delivered  to Optionee  shall  be in writing and addressed  to Optionee  at the address indicated below.  All notices shall be deemed effective upon personal delivery or upon deposit either in the U.S. or Canadian mail, postage prepaid and properly addressed to the party to be notified.
 
14.          FINANCING.  The  Plan  Administrator  may,  in its absolute  discretion  and  without  any obligation to do so, permit Optionee (other than an officer or director of the Company) to pay the Exercise Price for the purchased Option Shares by delivering a full-recourse promissory note payable to the Company. The terms of any such promissory  note (including  the interest rate, the requirements for collateral and the terms of repayment) shall be established by the Plan Administrator in its sole discretion.
 
15.      CONSTRUCTION. This Agreement and the option evidenced  hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator  with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.
 
16.       GOVERNING  LAW. The  interpretation,  performance and enforcement  of this Agreement shall be governed  by the laws of the State of Nevada without resort to that State’s conflict-of-laws rules.
 
17.       EXCESS SHARES. If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without stockholder approval be issued under the Plan, then this option shall be void with respect to those excess shares, unless stockholder approval of an amendment  sufficiently  increasing  the  number  of  shares  of  Common  Stock  issuable  under  the  Plan  is obtained in accordance with the provisions of the Plan.
 
18.        ADDITIONAL  TERMS  APPLICABLE  TO AN INCENTIVE  OPTION.  In the event  this option is designated an Incentive Option in the Grant Notice, the following terms and, conditions shall also apply to the grant:
 
(a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent):
 
          (i)  this option is exercised for one or more Option Shares:
 
          (A)  more than  three (3)  months  after  the date  Optionee  ceases  to be a Director, Officer, Employee or Consultant for any reason other than death or Permanent Disability or
 
          (B) more than twelve (12) months after the date Optionee ceases to be an Director, Officer, Employee or Consultant by reason of Permanent Disability; or


 
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          (ii) any Option Shares are disposed of within two years of the Grant Date or within one year of the Exercise Date.
 
(b) No installment under this option shall qualify for favorable tax treatment as an Incentive Option if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which such installment first becomes exercisable hereunder would, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this option or any other Incentive Options  granted to Optionee  prior to the Grant Date (whether  under the Plan or any other option plan of the Company or any Parent or Subsidiary)  first become exercisable  during the same calendar  year, exceed  One Hundred  Thousand  Dollars ($100,000)  in the aggregate. Should such One Hundred Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this option shall nevertheless become exercisable for the excess shares in such calendar year as a Non-Statutory Option.
 
(c) Should  the exercisability  of this option be accelerated  upon a Corporate Transaction,  then this option shall qualify for favorable tax treatment as an Incentive Option only to the extent the aggregate Fair Market  Value (determined  at the Grant  Date) of the Common  Stock  for which  this option  first  becomes exercisable  in the calendar  year in which  the Corporate  Transaction  occurs  does  not, when added  to the aggregate  value (determined  as of  the  respective  date  or dates  of grant)  of the Common  Stock  or other securities for which this option   or one or more other Incentive  Options  granted  to Optionee  prior to the Grant Date (whether  under the Plan or any other option  plan of the Company or any Parent or Subsidiary) first become exercisable  during the same calendar year, exceed One Hundred Thousand  Dollars ($1 00,000) in the aggregate. Should the applicable One Hundred Thousand Dol1ar ($1 00,000) limitation be exceeded  in the calendar  year of such Corporate  Transaction,  the option  may nevertheless  be exercised  for the excess shares in such calendar year as a Non-Statutory Option.
 
(d) Should Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar year as this option, then the foregoing limitations  on the exercisability  of such options  as Incentive  Options  shall be applied  on the basis of the order in which such options are granted.
 


 
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EXHIBIT I
 
NOTICE OF EXERCISE

 

I hereby notify Epoxy Inc. (the "Company") that I elect to purchase    shares of the Company's Common Stock (the "Purchased Shares") at the option exercise price of $0.03 per share (the "Exercise Price") pursuant to that certain option (the "Option") granted to me under the Company's  2014 Stock Option and Stock Award Plan on October 17, 2014. Concurrently with the delivery of this Exercise Notice to the Company, I shall hereby pay to the Company the Exercise Price for the Purchased Shares in accordance with the provisions of my agreement with the Company (or other documents) evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise.
 
 
 
 
   Date                                    

 
Optionee Address:

 
 

 
 


 

Print name in exact manner it is to appear on the stock certificate:  
 
Address to:
 
Which certificate is to be sent, if different from address above:
 
Social Security Number

 
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APPENDIX
 
The following definitions shall be in effect under the Agreement:
 
A. AGREEMENT shall mean this Stock Option Agreement.
 
B. BOARD shall mean the Company's Board of Directors.
 
C. CHANGE IN CONTROL shall be deemed to occur  in the event  of a change  in ownership  or control of the Company effected through either of the following transactions:
 
(A) the acquisition,  directly or indirectly, by any person or related group of persons (other than the Company  or a person that directly  or indirectly  controls,  is controlled  by, or  is under  common control  with, the Company)  of beneficial  ownership  (within  the meaning  of Rule  13d-3 of  the Securities Exchange  Act of  1934, as amended)  of securities  possessing  more than  fifty  percent  (50%)  of  the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders, or
 
(B) a change  in the composition  of the Board over a period of thirty-six  (36) consecutive months or  less such  that a  majority  of the Board  members  ceases,  by  reason  of one  or  more contested elections for Board membership, to be comprised  of individuals  who either  (i) have been Board  members continuously since the beginning of such period or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described  in clause (i) who were still in office at the time the Board approved such election or nomination.
 
D.  COMMON STOCK shall mean shares of the Company's Stock.
 
E.   CODE shall mean the Internal Revenue Code of 1 986, as amended.
 
F.  CORPORATE   TRANSACTION   shall  mean  either   of  the  following   stockholder-approved transactions to which the Company  is a party: (i) a merger or consolidation  in which securities  possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding  securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction,  or (ii) the sale, transfer or other disposition  of all or substantially  all of the Company's assets in complete liquidation or dissolution of the Company.
 
G. COMPANY shall mean Epoxy Inc., a Nevada company, and any successor company to all or substantially  all of the assets or voting stock of Epoxy Inc. which shall by appropriate  action adopt the
Plan.

H.  CONSULTANT  shall mean an individual who is retained by the Company (or any Subsidiary), subject to the control and direction of the Company (or any Subsidiary)  as to the work to be performed and the manner and method of performance.
 
I. EMPLOYEE shall mean an individual who is in the employ of the Company (or any Subsidiary), subject  to the control  and direction  of the employer  entity  as to both  the work to be performed  and  the manner and method of performance.

 
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J.  EXERCISE  DATE  shall  mean  the  date  on  which  the  option  shall  have  been  exercised   in accordance  with Paragraph 9 of the Agreement.
 
K. EXERCISE  PRICE  shall  mean the exercise  price per Option  Share  as specified  in the Grant Notice.
 
L. EXPIRATION  DATE shall mean the date on which the option expires as specified  in the Grant Notice.
 
M. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be determined in accordance  with the following provisions: (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common  Stock on the date in question, as the price is reported  by the National Association  of Securities Dealers  on the Nasdaq  National  Market or as reported  on an automated  quotation  system.  If there  is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists, or (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined  by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite  tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
 
N. GRANT DATE shall mean the date of grant of the option as specified in the Grant Notice.
 
0. GRANT NOTICE shall mean the Notice of Grant of Stock Option accompanying  the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.
 
P. INCENTIVE  OPTION  shall mean an option  which satisfies  the requirements  of Code  Section 422.
 
Q. INVOLUNTARY  TERMINATION  shall mean the termination  of Optionee's Service by reason

           (A) Optionee's  involuntary  dismissal  or discharge  by the Company  for reasons other  than Misconduct, or
 
(B) Optionee's  voluntary resignation following (a) a change  in Optionee's  position with the Company (or Parent or Subsidiary employing Optionee) which materially reduces Optionee's duties and responsibilities  or the level of management to which Optionee reports, (b) a reduction in Optionee's level of compensation (including base salary, fringe benefits and target bonus under any corporate performance based bonus or incentive programs) by more than fifteen percent (15%) or (c) a relocation of Optionee's  place of employment  by  more than fifty  (50)  miles, provided  and only  if such change,  reduction  or relocation  is effected by the Company without Optionee's consent.

 
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       R.  MISCONDUCT  shall mean the commission of any act of fraud, embezzlement  or dishonesty  by Optionee, any unauthorized use or disclosure by Optionee of confidential  information or trade secrets of the Company (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Company (or any Parent or Subsidiary)  in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Company (or any Parent or Subsidiary)  may consider as grounds for the dismissal or discharge of Optionee or any other individual in the Service of the Company (or any Parent or Subsidiary).
 
  S. NON-STATUTORY  OPTION shall mean an option not intended to satisfy  the requirements  of Code Section 422.

T. NOTICE OF EXERCISE shall mean the notice of exercise in the form attached hereto as Exhibit I.

U. OPTION SHARES  shall mean the number of shares of Common Stock subject  to the option as specified in the Grant Notice.

V. OPTIONEE shall mean the person to whom the option is granted as specified in the Grant Notice.
 
W. PARENT shall mean any company (other than the Company) in an unbroken chain of companies ending with the Company, provided each company in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other Companies in such chain.
 
X. PERMANENT  DISABILITY  shall mean the inability of Optionee to engage  in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more.
 
Y. PLAN shall mean the Company's 2014 Stock Option and Stock Award Plan.
 
Z. PLAN ADMINISTRATOR shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan or such other person as designated by the Board as administrator.
 
AA. SERVICE shall mean the Optionee's performance of services for the Company (or any Parent or Subsidiary)  in  the capacity  of  an  Employee,  a non-employee  member  of  the  board  of  directors,  a  non­ employee officer or a consultant or independent advisor.
 
BB. SUBSIDIARY shall mean any company (other than the Company) in an unbroken chain of companies  beginning  with  the  Company,  provided  each  company  (other  than  the  last  company)  in  the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain.
 


 
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EPOXY INC.
 
NOTICE OF STOCK AWARD  GRANT
 

UNLESS  OTHERWISE  DEFINED  HEREIN,  THE  TERMS  DEFINED  IN THE  EPOXY INC. 2014 STOCK OPTION AND STOCK AWARD PLAN SHALL HAVE THE SAME DEFINED  MEANINGS  IN THE  ATTACHED  STOCK  AWARD  AGREEMENT,  OF WHICH  THIS  NOTICE  OF STOCK  AWARD GRANT IS A PART.
 

I. NOTICE OF STOCK AWARD GRANT:
 
                ,  you  have  been  granted  a stock  award  of the Common Stock (the "Common Stock") of Epoxy Inc., subject to the terms and conditions  of the Epoxy Inc. 2014 Stock  Option and Stock  Award  Plan  and the attached Stock Award Agreement as follows:
 
 
Grant Number:
     
Date of Grant:
     
Vesting Commencement Date:
     
Total number of Award shares granted:
     
Term/Expiration Date:
     
       
VESTING SCHEDULE: This Award may be issued, in whole or in part, in accordance  with the following schedule:
       
       

                      

 
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STOCK AWARD AGREEMENT RECITALS
 
A.  The Board of Directors of  Epoxy Inc. (the "Company"), have adopted the 2014 Stock  Option and  Stock  Award Plan  (the "Plan")  for  the  purpose  of  retaining  the services  of selected  Directors,  Officers, Employees  and  Consultants  and  other  independent  advisors  who  provide services to the Company (or any Subsidiary) (the "Awardee").
 
B. Awardee has rendered valuable services to the Company (or a Subsidiary), and this Stock Award Agreement (this "Agreement")   is executed pursuant to, and is intended to carry out the purposes of  the Plan in connection with the Company's grant of a stock award to a director of the Company (the "Awardee").
 
C. All capitalized  terms in this Agreement shall have the meaning assigned to them in the attached Appendix.
 
NOW, THEREFORE,  it is hereby agreed as follows:
 
1.     GRANT OF STOCK AWARD. The Company hereby grants to Awardee, as of the Grant Date, a stock award for the number of Award Shares  specified  in the Grant Notice. The Award Shares shall be issued from time to time during the vesting term specified in Paragraph 2.
 
2.      AWARD TERM. This award shall have a maximum  term of two (2) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration  Date as defined  in the Notice of Grant, unless sooner terminated in accordance with Paragraph 5 or 6.
 
3.       LIMITED TRANSFERABILITY.

(a) This award shal1 be neither transferable nor assignable by Awardee other than by will or by the laws of descent and distribution following Awardee's death and will be only be granted  during Awardee's lifetime.
 
4.    DATES OF ISSUANCE. This award shall be granted for the Award Shares in one or more installments as specified in the Grant Notice.
 
5.       CESSATION OF SERVICE. The award term specified in Paragraph 2 shall terminate (and this award shall cease to be outstanding)  prior to the Expiration  Date should  any of the following  provisions become applicable:
 
(a)  Should  Awardee  die  while holding  this award,  then any awards  not  vested  will  immediately terminate;
 
(b) Should Awardee cease Service by reason of Permanent  Disability, then the award shall be pro­ rated for the time period served and pro rata issued to the date of cessation of service;
 
(c) Should Awardee's  Service be terminated either  by the Awardee or by the Company other than Misconduct  then this award shall automatically expire and the award shall be pro-rated for the time period served and pro rata issued to the date of termination, and

 
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(d)  Should  Awardee's  Service  be  terminated  for  Misconduct,   then  this  award  shall  terminate immediately and cease to remain outstanding on the date of termination and shall not be pro-rated.
 
6.       SPECIAL ACCELERATION OF AWARD.

(a) This award, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully issued, shall automatically accelerate so that this award shall, immediately prior to the effective date of such Corporate Transaction, become issuable for all of the Award Shares at the time subject to this award as fully vested shares of Common Stock. No such acceleration of this award shall occur, however, if and to the extent:  (i)  this award  is, in connection  with the Corporate  Transaction,  to be assumed  by  the successor company  (or  parent  thereof),  or  (ii)  this award  is to be  replaced  with  a cash  incentive  program  of  the successor company which preserves the value existing at the time of the Corporate Transaction  on the Award Shares  for  which this award  is not otherwise  at that time  issuable  (the Fair Market  Value  of the Award Shares) and provides for subsequent payout in accordance with the same award/vesting  schedule set forth in the Grant Notice.
 
(b) Immediately following the Corporate Transaction, this award shall terminate and cease to be outstanding, except to the extent assumed by the successor company (or parent thereof)  in connection  with the Corporate Transaction.
 
(c) If this award is assumed in connection with a Corporate Transaction, then this award shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Awardee in consummation  of such Corporate Transaction  had the award  been issued immediately  prior to such Corporate Transaction,  PROVIDED  the aggregate  award shall remain the same.
 
(d)  This  Agreement  shall  not  in any  way affect  the  right  of  the Company  to adjust,  reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate,  dissolve,  liquidate or sell or transfer all or any part of its business or assets.
 
7.    INVOLUNTARY  TERMINATION  FOLLOWING  CORPORATE  TRANSACTION/CHANGE IN CONTROL.
 
(a)       To the extent  the Award  is, in connection  with a Corporate  Transaction,  to be assumed  in accordance with Paragraph 6 of the Award Agreement, the Award shall not accelerate upon the occurrence of that Corporate Transaction, and the Award shall accordingly continue, over Awardee's period of Service after the  Corporate  Transaction,   to  become  issuable  for  the  Award  Shares  in  one  or  more  installments   in accordance   with  the  provisions  of  the  Award  Agreement.  However,  immediately  upon  an  Involuntary Termination  of Awardee's Service  within eighteen  (18) months following  such Corporate  Transaction,  the assumed Award, to the extent outstanding at the time but not otherwise fully issuable, shall automatically accelerate so that the Award shall become immediately issuable for all the Award Shares at the time subject to the Award and may be issued for any or all of those Award Shares as fully vested shares.

 
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(b)       The Award shall not accelerate  upon the occurrence of a Change in Control, and the Award shall, over Awardee's period of Service following such Change in Control continue to become issuable for the Award Shares in one or more installments  in accordance  with the provisions of the Award Agreement. However, immediately  upon an Involuntary Termination  of Awardee's Service within eighteen  (18) months following  the Change  in Control, the Award, to the extent outstanding  at the time but not otherwise  fully issuable,  shall  automatically  accelerate  so that  the Award shall  become  immediately  issuable  for  all  the Award Shares at the time subject to the Award and may be issued for any or all of those A ward Shares as fully vested shares.
 
    (c)     The provisions of this Paragraph 7 shall govern the period for which the Award is to remain issuable following  the Involuntary Termination  of Awardee's Service within eighteen  (18) months after the Corporate Transaction  or Change in Control and shall supersede any provisions to the contrary in Paragraph 5 of the Award Agreement.
 
8.     ADJUSTMENT  IN AWARD SHARES. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting  the outstanding Common Stock as a class without the Company's receipt of consideration, appropriate adjustments shall be made to (i) the total number and/or class of securities subject to this award and thereby preclude a dilution or enlargement of benefits hereunder.
 
9.     STOCKHOLDER  RIGHTS. The holder of this award shall not have any stockholder rights with respect to the Award Shares until such person sha11 have become a holder of record of the issued shares.
 
10.  COMPLIANCE  WITH LAWS AND REGULATIONS.
 
 The issuance of the Award Shares  shall be subject to compliance by the Company and Awardee with all applicable  requirements  of law  relating  thereto and  with all applicable  regulations  of any  stock exchange  on which  the Common  Stock  may be listed for trading at the time of such issuance.
 
11.         SUCCESSORS  AND ASSIGNS. Except to the extent otherwise provided in Paragraphs 3, 6 and 7, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors  and assigns and Awardee, Awardee's assigns, the legal representatives,  heirs and legatees of Awardee's estate and any beneficiaries of this award designated by Awardee.
 
12.        NOTICES.  Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices.  Any notice required  to be given or delivered  to Awardee  shall be in writing and addressed  to Awardee  at the address indicated below.  All notices shall be deemed effective upon personal delivery or upon deposit either in the U.S. or Canadian mail, postage prepaid and properly addressed to the party to be notified.
 
13.      CONSTRUCTION. This Agreement and the award evidenced  hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this award.
 
14.       GOVERNING LAW. The interpretation, performance and enforcement of this Agreement shall be governed  by the laws of the State of Nevada without resort to that State's conflict-of-laws rules.
 
15.       EXCESS SHARES.  If the Award Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without stockholder approval be issued under the Plan, then this award shall be void with respect to those excess shares, unless stockholder approval of an amendment  sufficiently  increasing  the  number  of  shares  of  Common  Stock  issuable  under  the  Plan  is obtained in accordance with the provisions of the Plan.
 
Dated: October 17, 2014
 

 
Epoxy Inc.                                                                                  Awardee:
Dave Gasparine                                                                         Residential address:



 
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APPENDIX
 

The following definitions shall be in effect under the Agreement:
 

A. AGREEMENT shall mean this Stock Award Agreement.
 
 B. BOARD shall mean the Company's Board of Directors.
 
C. CHANGE  IN CONTROL  shall be deemed  to occur  in the event  of a change  in ownership  or control of the Company effected through either of the following transactions:
 
(A) the acquisition,  directly or indirectly, by any person or related group of persons (other than the Company  or  a  person  that directly  or indirectly  controls,  is controlled  by, or  is under  common control  with,  the Company)  of  beneficial  ownership  (within  the meaning  of Rule  13d-3 of the Securities Exchange  Act of  1934,  as amended)  of  securities  possessing  more than  fifty  percent  (50%)  of  the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders, or
 
(B) a change  in the composition  of the Board over a period of thirty-six (36) consecutive months or  less such  that a  majority  of  the  Board  members  ceases,  by  reason  of one  or  more contested elections for Board membership, to be comprised of individuals who either (i) have been Board members continuously since the beginning of such period or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (i)  who were still in office at the time the Board approved such election or nomination.
 
D.  COMMON STOCK shall mean shares of the Company's Common Stock.
 
E.   CORPORATE   TRANSACTION   shall   mean  either  of  the  following   stockholder-approved transactions  to which the Company  is a party: (i) a merger or consolidation  in which securities  possessing more than fifty percent (50%) of the total combined  voting power of the Company's outstanding  securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction,  or (ii) the sale, transfer  or other disposition  of all or substantially  all of the Company's assets in complete liquidation or dissolution of the Company.
 
F. COMPANY  shall mean Epoxy Inc., a Nevada Company, and any successor company to all or substantially  all of the assets or voting stock  of Epoxy Inc. which shall by appropriate  action adopt the Plan.

G.  CONSULTANT  shall mean an individual  who is retained by the Company (or any Subsidiary), subject to the control and direction of the Company (or any Subsidiary) as to the work to be performed and the manner and method of performance.
 
H.  EMPLOYEE shall mean an individual who is in the employ of the Company (or any Subsidiary), subject  to the control  and direction  of the employer  entity  as to both  the work to be performed  and  the manner and method of performance.
 
 
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I. ISSUANCE DATE shall mean the date on which the award shall have been issued in accordance with the Grant Notice.
 
J.  EXPIRATION  DATE shall mean the date on which the award expires as specified in the Grant Notice.
 
   K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be determined in accordance  with the following  provisions:  (i) If the Common  Stock  is at the time traded  on  the Nasdaq National Market, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock on the date in question,  as the price is reported  by the National Association  of Securities Dealers  on  the Nasdaq  National  Market  or as reported  on an automated  quotation  system.  If there  is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists, or (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions  on such exchange. If there is no closing selling price for the Common Stock on the date in question,  then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
 
L. GRANT DATE shall mean the date of grant of the award as specified in the Grant Notice.
 
M. GRANT NOTICE shall mean the Notice of Grant of Stock Award accompanying the Agreement, pursuant to which Awardee has been informed of the basic terms of the award evidenced hereby.
 
N. INVOLUNTARY TERMINATION  shall mean the termination  of Awardee's Service by reason  of:

(A)  
Awardee's  involuntary  dismissal  or discharge  by the Company  for reasons  other  than Misconduct, or
 
(B)  
Awardee's  voluntary  resignation  following (a) a change in Awardee's position with the Company (or Parent or Subsidiary employing Awardee) which materially reduces Awardee's duties and responsibilities or the level of management to which Awardee reports, (b) a reduction in Awardee's level of compensation (including base salary, fringe benefits and target bonus under any corporate performance based bonus or incentive programs)  by more than fifteen percent (15%) or (c) a relocation of Awardee's place of employment  by  more than fifty  (50)  miles, provided  and  only  if such change,  reduction  or relocation  is effected by the Company without Awardee's consent.

 
 
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     0. MISCONDUCT  shall mean the commission  of any act of fraud, embezzlement  or dishonesty by Awardee, any unauthorized use or disclosure by Awardee of confidential information or trade secrets of the Company (or any Parent or Subsidiary), or any other intentional misconduct by Awardee adversely affecting the business or affairs of the Company (or any Parent of Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Company (or Subsidiary) may consider as grounds for the dismissal or discharge of Awardee or any other individual in the Service of the Company (or any Parent or Subsidiary).
 
P. AWARD SHARES  shall mean the number of shares of Common Stock subject to the award as specified in the Grant Notice.
 
Q. AWARDEE shal1 mean the person to whom the award is granted as specified in the Grant Notice.
 
R. PARENT shall mean any company (other than the Company) in an unbroken chain of companies ending with the Company, provided each company in the unbroken chain (other than the Company) owns, at the time of the·· determination,  stock  possessing  fifty percent (50%)  or more of the total combined  voting power of all classes of stock in one of the other Companies in such chain.
 
S. PERMANENT  DISABILITY  shall  mean the inability of Awardee to engage  in any substantial gainful activity by reason of any medically determinable  physical or mental impairment which is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more.
 
T. PLAN shall mean the Company's 2014 Stock Option and Stock Award Plan.
 
U. PLAN ADMINISTRATOR  shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan, or such other person as designated by the Board as administrator.
 
V. SERVICE shall mean the Awardee's performance of services for the Company (or any Parent or Subsidiary)  in the capacity  of  an  Employee,  a  non-employee  member  of  the board  of  directors,  a non­ employee officer or a consultant or independent advisor.
 
W. SUBSIDIARY  shall  mean  any  company  (other  than  the  Company)  in an  unbroken  chain  of companies  beginning  with  the  Company,  provided  each  company  (other  than  the  last  company)  in  the unbroken chain owns, at the time of the determination,  stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain.


 
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THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)
 
 

US $125,000.00


EPOXY, INC.
8% CONVERTIBLE REDEEMABLE NOTE
DUE AUGUST 22, 2015


FOR VALUE RECEIVED, EPOXY, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of One Hundred Twenty Five Thousand Dollars exactly (U.S. $125,000.00) on August 22, 2015 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on August 22, 2014. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note.  The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225  initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time.  The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company.  The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer.  Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

1.           This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same.  No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

 
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2.           The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

3.           This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws.  Any attempted transfer to a non-qualifying party shall be treated by the Company as void.  Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary.  Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

4.           (a)           The Holder of this Note is entitled, at its option, at any time after 180 days, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") without restrictive legend of any nature, at a price ("Conversion Price") for each share of Common Stock equal to 52% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twelve prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion.  Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank.  Accrued, but unpaid interest shall be subject to conversion.  No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.  In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 42% instead of 52% while that “Chill” is in effect.

(b)           Interest on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum.  Interest shall be paid by the Company in Common Stock ("Interest Shares").  Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above.  The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

(c)           During the first 180 days this Note is in effect, the Company may redeem this Note by paying to the Holder an amount as follows:  (i) if the redemption is within the first 90 days this Note is in effect, then for an amount equal to 125% of the unpaid principal amount of this Note along with any interest that has accrued during that period, (ii) if the redemption is after the  91st day this Note is in effect this Note is in effect, then for an amount equal to 135% of the unpaid principal amount of this Note along with any accrued interest. This Note may not be redeemed after 180 days. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note.

 
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(d)           Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 140% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

(e)           In case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

5.           No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

6.           The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

7.           The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

8.           If one or more of the following described "Events of Default" shall occur:

(a)           The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b)           Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or

 
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(c)           The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

(d)           The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for  bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

(e)           A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or

(f)           Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

(g)           Unless previously disclosed in the Company’s filings with the Securities and Exchange Commission, one or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder.

(h)           The Company shall have defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such default within the appropriate grace period; or

(i)           The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;

(j)           If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;

(k)           The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or

(l)           The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder; or

(m)           The Company shall not be “current” in its filings with the Securities and Exchange Commission; or

 
4

 
(n)           The Company shall lose the “bid” price for its stock in a market (including the OTCQB marketplace or other exchange).

Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law.  Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.  In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company.  This penalty shall increase to $500 per day beginning on the 10th day.  The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%.  In case of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%.  If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.

If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
 
9.           In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

10.           Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

11.           The Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a “shell issuer.  Further. The Company will instruct its counsel to either (i) write a 144- 3(a) (9) opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.
 
                       12.          The Company shall issue irrevocable transfer agent instructions reserving 33,620,000 shares of its Common Stock for conversions under this Note (the “Share Reserve”). The reserve shall be replenished as needed to allow for conversions of this Note.   Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all costs associated with issuing and delivering the shares. The company should at all times reserve a minimum of four times the amount of shares required if the note would be fully converted.  The Holder may reasonably request increases from time to time to reserve such amounts.

 
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13.           The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc.  This notice shall be given to the Holder as soon as possible under law.

14.           This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto.  The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York.  This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
 

____
Initials

 
6

 



IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.


Dated:                                           

 
 

EPOXY, INC.

By: __________________________________

Title: _________________________________

 

____
  Initials
 
7

 

EXHIBIT A


NOTICE OF CONVERSION

 (To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of EPOXY, Inc.  (“Shares”) according to the conditions set forth in such Note, as of the date written below.

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

Date of Conversion:                                                                                                                                
Applicable Conversion Price:                                                                                                                     
Signature:                                                                                                                     
[Print Name of Holder and Title of Signer]
Address:                                                                                                                     
 
 

SSN or EIN:                                                                 
Shares are to be registered in the following name:

Name:                                                                                                                                
Address:                                                                                                                     
Tel:                                                                
Fax:                                                                 
SSN or EIN:                                                                

Shares are to be sent or delivered to the following account:

Account Name:                                                                                                                     
Address:                                                                                                                     



 

____
  Initials
 
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NEITHER THIS NOTE NOR THE SECURITIES THAT MAY BE ISSUED BY THE BORROWER UPON CONVERSION HEREOF (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED: (i) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR APPLICABLE STATE SECURITIES LAWS; OR (ii) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR; (iii) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.

 

 
 
10% CONVERTIBLE NOTE
 
Maturity Date of April 16, 2015
 
$100,000   September 17, 2014  *the “Issuance Date”


 
FOR VALUE RECEIVED, Epoxy, Inc., a Nevada Corporation (the “Company”) doing business in Las Vegas, NV hereby promises to pay to the order of JSJ Investments Inc., an accredited investor and Texas Corporation, or its assigns (the “Holder”) the principal amount of One Hundred Thousand Dollars ($100,000), on demand of the Holder at any time on or after April 16, 2015 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of Ten Percent (10%) per annum (the Interest Rate) from the date hereof (the Issuance Date) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise; provided, that  any amount of principal or interest on this Note which is not paid when due shall bear interest at such rate on the unpaid principal balance hereof plus Default Interest from the due date thereof until the same is paid in full.  Interest shall commence accruing on the Issuance Date, shall be computed on the basis of a 365-day year and the actual number of days elapsed and shall accrue daily and, after the Maturity Date, compound quarterly.
 
1.  
Payments of Principal and Interest.
 
a.  
Payment of Principal.  Upon the Maturity Date, this note has a cash redemption premium of 150% of the principal amount only upon approval and acceptance by JSJ Investments Inc. This provision only may be exercised if the consent of the Holder is obtained. The principal balance of this Note shall be paid to the Holder hereof on demand.
 
b.  
Default Interest.  Any amount of principal on this Note which is not paid when due shall bear Ten Percent (10%) interest per annum from the date thereof until the same is paid (“Default Interest”) and the Holder, at the Holder’s sole discretion, may include any accrued but unpaid Default Interest in the Conversion Amount.
 
c.  
General Payment Provisions.  This Note shall be made in lawful money of the United States of America by check to such account as the Holder may from time to time designate by written notice to the Company in accordance with the provisions of this Note.  Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. For purposes of this Note, “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the State of Texas are authorized or required by law or executive order to remain closed.
 
 
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2.  
Conversion of Note. At any time prior to the Maturity Date, or after the Maturity Date, the Conversion Amount of this Note shall be convertible into shares of the Company’s common stock, share (the “Common Stock”), on the terms and conditions set forth in this Paragraph 2.
 
a.  
Certain Defined Terms. For purposes of this Note, the following terms shall have the following meanings:
 
i.  
Conversion Amount” means the sum of (A) the principal amount of this Note to be converted with respect to which this determination is being made, (B) Interest; and (C) Default Interest, if any, on unpaid interest and principal, if so included at the Holder’s sole discretion.
 
ii.  
Conversion Price” means the lower of: (i) 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 (ii) 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.
 
iii.  
Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
 
iv.  
Shares” means the Shares of the Company into which any balance on this Note may be converted upon submission of a Conversion Notice.
 
b.  
Holder’s Conversion Rights. At any time or times on or after the Issuance Date, the Holder shall be entitled to convert all of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock in accordance with the stated Conversion Price.
 
c.  
Fractional Shares. The Company shall not issue any fraction of a share of Common Stock upon any conversion; if such issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.
 
d.  
Conversion Amount. The Conversion Amount shall be converted pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) as promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, into free trading shares at the Conversion Price.
 
e.  
Mechanics of Conversion. The conversion of this Note shall be conducted in the following manner:
 
i.  
Holder’s Conversion Requirements. To convert this Note into shares of Common Stock on any date set forth in the Conversion Notice by the Holder (the “Conversion Date”), the Holder hereof shall transmit by email, facsimile or otherwise deliver, for receipt on or prior to 11:59 p.m., Eastern Time on such date or on the next business day, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit 1 (the “Conversion Date”) to the Company.
 
ii.  
Company’s Response. Upon receipt by the Company of a copy of a Conversion Notice, the Company shall as soon as practicable, but in no event later than one (1) Business Day after receipt of such Conversion Notice, send, via email, facsimile or overnight courier, a confirmation of receipt of such Conversion Notice to such Holder indicating that the Company will process such Conversion Notice in accordance with the terms herein. Within two (2) Business Days after the date of the Conversion Confirmation, the Company shall have issued and electronically transferred the shares to the Broker indicated in the Conversion Notice; should the Company be unable to transfer the shares electronically, it shall, within two (2) Business Days after the date of the Conversion Confirmation, have surrendered to FedEx for delivery the next day to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder, for the number of shares of Common Stock to which the Holder shall be entitled.
 
 
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iii.  
Record Holder. The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.
 
iv.  
Timely Response by Company. Upon receipt by Company of a Conversion Notice, Company shall respond in a timely manner to Holder by provision within two business days of the Shares requested in the Conversion Notice.
 
v.  
Penalty for Delinquent Response. If Company fails to deliver for whatever reason (including any neglect or failure by, e.g., the Company, its counsel or the transfer agent) to Holder the Shares as requested in a Conversion Notice and within three business days of the receipt thereof, there shall accrue a penalty of Additional Shares due to Holder equal to 25% of the number stated in the Conversion Notice beginning on the Fourth business day after the date of the Notice.  The Additional Shares shall be issued and the amount of the Note retired will not be reduced beyond that stated in the Conversion Notice.  Each additional 5 business days beyond the Fourth business day after the date of this Notice shall accrue an additional 25% penalty for delinquency, without any corresponding reduction in the amount due under the Note, for so long as Company fails to provide the Shares so demanded.
 
vi.  
Conversion Right Unconditional.   If the Holder shall provide a Notice of Conversion as provided herein, the Company’s obligations to deliver Common Stock shall be absolute and unconditional, irrespective of any claim of setoff, counterclaim, recoupment, or alleged breach by the Holder of any obligation to the Company.
 
vii.  
Transfer Agent Fees and Legal Fees. The issuance of the certificates shall be without charge or expense to the Holder. The Company shall pay any and all Transfer Agent fees, legal fees, and advisory fees required for execution of this Convertible Note and processing of any Notice of Conversion, including but not limited to the cost of obtaining a legal opinion with regard to the conversion. The Holder will deduct legal fees in the amount of $2,000 from the principal payment of the Convertible Note. The Holder will deduct advisory fees due to Carter, Terry & Company in the amounts of $10,000 from the principal payment of the Convertible Note.
 
3.  
Other Rights of Holders: Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another Person or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as “Organic Change. Prior to the consummation of any (i) Organic Change or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the “Acquiring Entity”) a written agreement (in form and substance reasonably satisfactory to the Holder) to deliver to Holder in exchange for this Note, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Note, and reasonably satisfactory to the Holder.  Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the Holders of a majority of the Conversion Amount of the Notes then outstanding) to ensure that each of the Holders will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of such Holder’s Note, such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock which would have been acquirable and receivable upon the conversion of such Holder’s Note as of the date of such Organic Change (without taking into account any limitations or restrictions on the convertibility of the Note).  All provisions of this Note must be included to the satisfaction of Holder in any new Note created pursuant to this section.
 
 
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4.  
Representations and Warranties of the Company. In connection with the transactions provided for herein, the Company hereby represents and warrants to the Holders the following.
 
a.  
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted.  The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.
 
b.  
Authorization. All corporate action has been taken on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement.  The Company has taken all corporate action required to make all of the obligations of the Company reflected in the provisions of this Agreement, valid and enforceable obligations. The shares of capital stock issuable upon conversion of the Notes have been authorized or will be authorized prior to the issuance of such shares.
 
c.  
Fiduciary Obligations. The Company hereby represents that it intends to use the proceeds of the Notes primarily for the operations of its business and not for any personal, family, or household purpose.  The Company hereby represents that its board of directors, in the exercise of its fiduciary duty, has approved the execution of this Agreement based upon a reasonable belief that the loan provided for herein is appropriate for the Company after reasonable inquiry concerning its financial objectives and financial situation.
 
5.  
Covenants of the Company. So long as the Company shall have any obligations under this Note, the Company shall not without the Holder’s written consent pay, declare or set apart for such payment any dividend or other distribution (whether in cash, property, or other securities) on share of capital stock solely in the form of additional shares of Common Stock.
 
a.  
So long as the Company shall have any obligations under this Note, the Company shall not without the Holder’s written consent redeem, repurchase, or otherwise acquire (whether for cash or in exchange for property or other securities) in any one transaction or series of transactions any shares of capital stock of the Company or any warrants, rights, or options to acquire any such shares.
 
b.  
So long as the Company shall have any obligations under this Note, the Company shall not without the Holder’s written consent incur any liability for borrowed money, except (a) borrowings in existence as of this date and of which the Company has informed the Holder in writing before the date hereof or (b) indebtedness to trade creditors or financial institutions incurred in the ordinary course of business.
 
c.  
So long as the Company shall have any obligations under this Note, the Company shall not without the Holder’s written consent sell, lease, or otherwise dispose of a significant portion of its assets outside the ordinary course of business.  Any consent to the disposition of any assets may be conditioned upon a specified use of the proceeds thereof.
 
6.  
Reservation of Shares. The Company shall at all times, so long as any principal amount of the Note is outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Note, such number of shares of Common Stock as shall at all times be sufficient to effect the conversion of all of the principal amount of the Note then outstanding. The initial number of shares of Common Stock reserved for conversions of the Notes and each increase in the number of shares so reserved shall be allocated pro rata among the Holders of the Note based on the principal and interest amount of the Notes held by each Holder at the time of issuance of the Notes or increase in the number of reserved shares, as the case may be. In the event a Holder shall sell or otherwise transfer any of such Holder’s Note, each transferee shall be allocated a pro rata portion of the number of reserved shares of Common Stock reserved for such transferor. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Note shall be allocated to the remaining Holders, pro rata based on the principal amount of the Note then held by such Holders.
 
 
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7.  
Voting Rights. Holders of this Note shall have no voting rights, except as required by law.
 
8.  
Reissuance of Note. In the event of a conversion or redemption pursuant to this Note of less than all of the Conversion Amount represented by this Note, the Company shall promptly cause to be issued and delivered to the Holder, upon tender by the Holder of the Note converted or redeemed, a new note of like tenor representing the remaining principal amount of this Note which has not been so converted or redeemed and which is in substantially the same form as this Note, as set forth above.
 
9.  
Default and Remedies.
 
a.  
Event of Default. An “Event of Default is: (i) default for ten (10) days in payment of interest or Default Interest on this Note; (ii) default in payment of the principal amount of this Note when due; (iii) failure by the Company for thirty (30) days after notice to it to comply with any other material provision of this Note; (iv) breach of any covenants, warranties, or representations by the Company herein; (v) cessation of operations by the Company or a material subsidiary; (vi) if the Company pursuant to or within the meaning of any Bankruptcy Law; (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) admits in writing that it is generally unable to pay its debts as the same become due; or (vi) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (I) is for relief against the Company in an involuntary case; (2) appoints a Custodian of the Company or for all or substantially all of its property; or (3) orders the liquidation of the Company or any subsidiary, and the order or decree remains unstayed and in effect for thirty (30) days. The Term “Bankruptcy Law” means Title 11, U.S. Code, or any similar Federal or State Law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
 
b.  
Remedies. If an Event of Default occurs and is continuing, the Holder of this Note may declare all of this Note, including any interest and Default Interest and other amounts due, to be due and payable immediately.
 
10.  
Vote to Change the Terms of this Note. This Note and any provision hereof may only be amended by an instrument in writing signed by the Company and holders of a majority of the aggregate Conversion Amount of the Notes then outstanding.
 
11.  
Lost or Stolen Note. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company in a form reasonably acceptable to the Company and, in the case of mutilation, upon surrender and cancellation of the Notes, the Company shall execute and deliver a new Note of like tenor and date and in substantially the same form as this Note; provided, however, the Company shall not be obligated to re-issue a Note if the Holder contemporaneously requests the Company to convert such remaining principal amount into Common Stock.
 
12.  
Payment of Collection, Enforcement and Other Costs. If: (i) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding; or (ii) an attorney is retained to represent the Holder of this Note in any bankruptcy, reorganization, receivership or other proceedings affecting creditors’ rights and involving a claim under this Note, then the Company shall pay to the Holder all reasonable attorneys’ fees, costs and expenses incurred in connection therewith, in addition to all other amounts due hereunder.
 
13.  
Cancellation. After all principal and accrued interest at any time owed on this Note has been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
 
14.  
Waiver of Notice. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note.
 
 
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15.  
Governing Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the laws of the State of Texas, without giving effect to provisions thereof regarding conflict of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in Texas for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by sending by certified mail or overnight courier a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
16.  
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including a decree of specific performance and/or other injunctive relief), and no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note. The Company covenants to each Holder of Notes that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).
 
17.  
Specific Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general provision contained herein. This Note shall be deemed to be jointly drafted by the Company and all Holders and shall not be construed against any person as the drafter hereof.
 
18.  
Failure or Indulgence Not Waiver. No failure or delay on the part of this Note in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
 
19.  
Partial Payment. In the event of partial payment by the Holder, the principal sum due to the Holder shall be prorated based on the consideration actually paid by lender such that the company is only required to repay the amount funded and the company is not required to repay any unfunded portion of this note. 
 
20.  
Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects herein.  None of the terms of this Agreement can be waived or modified, except by an express agreement signed by the Parties.
 
21.  
Representations and Warranties. The Company expressly acknowledges that the Holder, including but not limited to its officer, directors, employees, agents, and affiliates, have not made any representation or warranty to it outside the terms of this Agreement.  The Company further acknowledges that there have been no representations or warranties about future financing or subsequent transactions between the parties.
 
22.  
Notices. All notices and other communications given or made to the Company pursuant hereto shall be in writing (including facsimile or similar electronic transmissions) and shall be deemed effectively given:  (i) upon personal delivery, (ii) when sent by electronic mail or facsimile, as deemed received by the close of business on the date sent, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery.  All communications shall be sent either by email, or fax, or to the address specified on the signature page. The physical address, email address, and phone number provided on the signature page shall be considered valid pursuant to the above stipulations; should the Company’s contact information change from that listed on the signature page, it is incumbent on the Company to inform the Holder.
 
 
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23.  
Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the rest of the Agreement shall be enforceable in accordance with its terms.
 
24.  
Usury.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal or interest on this Note.
 
25.  
Successors and Assigns. This Agreement shall be binding upon successors and assigns.
 

 
 
SIGNATURE PAGE TO FOLLOW
 

 
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IN WITNESS WHEREOF, the Company has caused this Note to be signed by its CEO, on and as of the Issuance Date.
 
 
 
COMPANY:
 

 
 
Signature:
 

 
  
By:                               ___________________________________________________



Title:                               ___________________________________________________
 


Address:                      ___________________________________________________

                                      ___________________________________________________
 

                      ___________________________________________________



Email:
___________________________________________________



Phone:
___________________________________________________

 
HOLDER:
 
 
Signature:

 
Sameer Hirji, President
JSJ Investments Inc. 
2665 Villa Creek Drive, Suite 214
Dallas TX 75234 
888-503-2599

 

 
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Exhibit 1
Conversion Notice

 
Reference is made to the Convertible issued by Epoxy, Inc. (the "Note"), dated September 17, 2014 in the principal amount of $100,000 with 12% interest. This note currently holds a principal balance of $______ and accrued interest in the amount of $_______. The features of conversion stipulate a Conversion Price the lower of (i) 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 (ii) 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, pursuant to the provisions of Section 2(a)(2) in the Note.
 
 
In accordance with and pursuant to the Note, the undersigned hereby elects to convert $______ of the PRINCIPAL/INTEREST balance of the Note, indicated below into shares of Common Stock (the "Common Stock"), of the Company, by tendering the Note specified as of the date specified below.
 
Date of Conversion: __________
 
Please confirm the following information:
 
Conversion Amount:  $ ____________________
 
Conversion Price: $ ____________________ ( ____ % discount from $ ____________________)
 
Number of Common Stock to be issued: _____________________________________________________________________
 
Current Issued/Outstanding: _______________________________________________________________________________
 
PLEASE ISSUE THE COMMON STOCK INTO WHICH THE NOTE IS BEING CONVERTED IN THE NAME OF THE HOLDER OF THE NOTE AND TRANSFER THE SHARES ELECTRONICALLY TO:
 
[BROKER INFORMATION]

HOLDER AUTHORIZATION:
 
JSJ INVESTMENTS INC.
2665 VILLA CREEK DRIVE, SUITE 214
DALLAS, TX 75234
888-503-2599
Tax ID: 20-2122354                                                                          
 
Sameer Hirji, President
 
 
Date:
 
 
[Continued on Next Page]
 

 
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PLEASE BE ADVISED, pursuant to Section 2(e)(2) of the Note, “Upon receipt by the Company of a copy of the Conversion Notice, the Company shall as soon as practicable, but in no event later than one (1) Business Day after receipt of such Conversion Notice, SEND, VIA EMAIL, FACSIMILE OR OVERNIGHT COURIER, A CONFIRMATION OF RECEIPT OF SUCH CONVERSION NOTICE TO SUCH HOLDER INDICATING THAT THE COMPANY WILL PROCESS SUCH CONVERSION NOTICE in accordance with the terms herein. Within two (2) Business Days after the date of the Conversion Confirmation, the Company shall have issued and electronically transferred the shares to the Broker indicated in the Conversion Notice; should the Company be unable to transfer the shares electronically, they shall, within two (2) Business Days after the date of the Conversion Confirmation, have surrendered to FedEx for delivery the next day to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder, for the number of shares of Common Stock to which the Holder shall be entitled.”

 

 
Signature:
 
 


 
Dave Gasparine
 
CEO
Epoxy, Inc.


 

 
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